Natural Gas Is Moving Fast

Okay, maybe not fast. But it certainly is moving differently than it has been. After falling about 80% from its highs from August to March, natural gas futures have been taking the first step to reverse their trend…stop going down. ⏸️

Below is a daily chart of natural gas futures trading in a $2.00 to $2.65 range for the last five months. But this week, traders are putting it back on their radar due to its strength relative to the rest of the energy commodity complex. With crude oil, gasoline, and heating oil all falling several percent this week, natural gas’s nearly 5% gain certainly stands out. πŸ€”

And from a long-term perspective, some investors and traders see the current area as an interesting one. The daily chart below shows prices stabilized above the $2.00 level that’s acted as an important support and resistance level over the last few years. For the non-technical analysts in the room, that simply means an area where there’s been a significant shift in supply and demand. 🧭

Earlier in the year, there was a lot of activity in natural gas on the short side. Inverse and leveraged ETFs were regularly trending on our streams as traders played the trend to the downside. But so far…there hasn’t been much activity as prices have started to move higher. πŸ”ˆ

That lack of interest is catching traders’ attention, who believe this week’s rally is the beginning of a new uptrend. Time will tell, as always. But we figured we’d point it out as an interesting, under-the-radar development in the volatile natural gas market. πŸ‘€

Crude Tops 90 As Inflation Ticks Up

Before we get into U.S. data, we need to discuss the European Central Bank’s (ECB) rate decision. The central bank surprised markets by raising rates another 25 bps to 4.00%, marking its tenth consecutive hike. πŸ”Ί

Unlike the U.S., Europe has not made as much progress in bringing down inflation, and its economy has not been as resilient. The region started raising rates later than the U.S. and experienced more direct impacts of the war in Ukraine, so it’s understandable that they’d be a bit behind the curve in making progress.

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Cotton’s Breakout Poses Problems

We know many of you are rolling your eyes at the title of this post because you’re thinking, “I trade and invest equities; why should I care about cotton prices?” And you’re right; you generally shouldn’t care. But commodities matter to the broader market when they’re at inflection points, which may be the case for cotton. πŸ€”

Give us a second to explain, and we promise it’ll all come together…

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Gold Soars To All-Time Highs

About a week after the chatter around gold began to pick up on Stocktwits, the shiny metal is hitting new all-time highs. But still, some are perplexed as to why it’s rallying. πŸ€”

Bears argue that gold should not be rallying in the current environment. After all, inflation continues to trend back toward the Fed’s 2% target, and the economy is holding up well thanks to a strong labor market and consumer spending. And with the risk-free rate still above 5%, some investors and traders argue there are better alternatives to gold and precious metals as a group.

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Sugar Hits Sweet Spot As Gold Shines

It was a slow day out there, but several commodities caught traders’ eyes. Let’s see which ones. πŸ‘€

First up is sugar futures, which have experienced a nearly 30% decline since the beginning of November. While its major decline is one reason to be on people’s radars, technical traders say prices have reached the 20-20.50 area that served as an inflection point over the last two years.

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