Nat Gas Ginsu

Early in my trading career, I had a fascination with buying stocks in huge downtrends hoping for a bounce.   If you liked it at $2.50, you'll love it at $2.  I quickly realized it was not the right strategy for me and I seized looking at the percentage losers list to find buy candidates.  Individual stocks have a strong tendency to trend, especially when they have been going down for a long time.

But, I make exceptions to this in the case of commodities.  It is about that time. Time to bring out the Kevlar gloves to catch that knife.  I am bearish on natural gas but short term patterns are coming into play here setting up a huge dead cat bounce.  We have a capitulation chart pattern where the NG May 12 contract previoius support at $2.30 held for several weeks, consolidating the down move, and then support gets broken in a big capitulation move lower, usually on bad news.  We got the bad news with the bad inventory report, and with it being the end of the quarter last week, you saw a lot of forced selling artificially deflating prices.  This presents an opportunity to buy the falling knife for a swing trade.  Natural gas could reach $2.60 within 2 weeks.