Greetings once again from TraderDigs’ Laboratory. Today is the first day of fall; the autumnal equinox. Daylight hours are rapidly diminishing and the nights are getting cooler. With winter on the horizon, I have a theory about natural gas. As I’m sure you’re aware, charts elsewhere are very messy, but there’s a few things to look at in natty as we plumb new depths on lackluster volume.

As a reversal trade, all the usual caveats apply, but this one looks compelling. My macro theory here is that natgas currently represents one of very few asset classes that could be appropriately termed as “value.” Everything else was inflated by QE ad nauseam. I’ve read about the supply glut, but despite that I think wary funds looking for a home in an otherwise casino of a stock market may find it in this abundant domestic resource.

Sure, there are also political angles, but I’m mostly concerned with the charts, and that’s what I wanted to look at here. I would like to also point out its relative performance on Thursday, having been down only about 1% against a backdrop of much larger losses elsewhere in the commodities complex.

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UNG daily chart – first thing to notice is a double MACD versus price diveregence. Second is the non-confirmation in volume. Put simply, sellers are not aggressive.

GAZ weekly chart – backside retest of a broken downtrend line. I have been tracking this for a long time. Jesse Livermore once said that in making speculation a business, one necessarily keeps an eye on all markets for big opportunities. Is this one of them?

UNL daily chart – dollar volume is not great, but there are market makers with size on both the bid and the ask during normal market hours. This last chart is dynamic and will update over time.

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As always: Use stops. Stay nimble. Questions/comments welcome!