• Natural gas has initially fell during the trading session on Monday, with the idea of reaching down to the $3.00 level below. This is an area that obviously is a large, round, psychologically significant figure, and an area that I think will continue to attract a certain amount of attention. After all, as we started the November contract, we gapped above the $3.00 level and shot straight up in the air toward the $3.60 level. Because of this, I am very interested in natural gas at the moment as I think we have a real shot at a bit of a bounce.

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Cyclical

Keep in mind this is a market that is cyclical in general, and we have to understand that demand for natural gas will start to pick up again as we roll into the November contract, and then again into the December contract in a few weeks. Quite frankly, the market is going to be looking to the higher demand for heating in the United States and Europe to drive prices higher. There is a little bit of concern when it comes to the overall demand for natural gas when it comes to powering large industrial companies, because quite frankly, people believe that the global economy is going to slow down. However, heating will cause a bit of noise in this market and eventually we will get cold enough whether to drive up the demand for natural gas so therefore I think this is a nice longer-term “swing trade opportunity.”

If we break below the $3.00 level, then I think you’ve got a situation where we may try to reach the $2.90 level, which was the beginning of that gap. I’m not necessarily expecting that deep of a correction, and the fact that the session looks as if it is trying to form a bit of a hammer tells me that the buyers are starting to get interested in natural gas again.

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