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Late Profit Taking Stems Rally; Friday Too Tough to Call
Following on the heels of Wednesday’s 15.8-cent rally, naturalgas futures checked higher to notch another all-time prompt monthhigh, only to turn around and crumble during the last 10 minutesyesterday, as traders took profits at the closing bell. Thesell-off was most pronounced in the October contract, which etcheda daily low at $4.74 moments before settling at $4.782, down 1.9cents for the session. Estimated volume was extremely weak, withjust under 50,000 contracts changing hands.
“There weren’t any bulls left,” said a Houston trader afterwatching October tumble more than a dime from $4.865 highs at theclosing bell Thursday. “The market was fresh out of buyers —everyone was already long. So when a few people decided to takeprofits, there was nobody left to buy. The market was in a vacuum.”
Looking ahead, traders are left in somewhat of a conundrum ingoing into today’s abbreviated trading session. Is it better to gohome for the holiday weekend a little on the long side in case atropical storm or hurricane develops over the weekend, or shortwith the rationale that prices will retrace lower following therecent move higher.
“It’s a tough call,” said a trader. “On the one hand you don’twant to be short if a storm develops. However, I don’t think yourwife would let you in the house if she knew you were long over theweekend at an average cost of just a nickel under the all-timeprompt month high. If you’re long, you’ve got to believe in $5.00gas.”
It deserves mention that while Mondays have been mixed lately,Fridays have been bulls’ best friend, as traders have pushed priceshigher in each of the last five Friday trading sessions. However,that is not to say you should go out and buy today’s open and sellthe close, because that strategy over the last five weeks wouldhave actually netted you a loss of a penny and a half.
At the same time, the beginning of the week has been a lot morevolatile, with advances as large as Hurricane Debby’s 31.1 centsspike on Aug. 21, offset by a crude oil-led 36.7-cent natural gassell-off back on July 5. Either way, traders agree that it is veryeasy to get chopped up in this market.
Natural gas futures will close at 1:00 p.m. (EST) today ahead ofthe holiday weekend. Trading is set to resume Tuesday morning at10:00 a.m. (EST).
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