Cycle Trading

[Duma]

There were a couple of comments made by the writer that were really a big surprise to me.

My upside price target for the commodity remains $6.50/MMBTU.

Cosidering that in Aug the price was over $9, that seems like a very modest target.

I shorted KOLD rather than buying BOIL due to the prospect for significant leverage-induced decay in this high volatility environment. Going long a 2x ETF will suffer from this decay while shorting the inverse fund will benefit from it.

What, I never heard of such a thing, so I did some comparisons and was shocked at what I saw. I used the period of Aug 23 to yday. I choose Aug23, because that was a good starting point for the big decline. The data I got makes no sense to me. Cleary NG 2x etf's are a very different animal than the 3x SPY ones. I suspect it has something to do with future contracts used in making up the etf's.

I wanted to get a picture in my mind of the actual gas prices so I created a daily chart. I was surprised how orderly it was in general. Yes there were so big jump days, but still I liked the chart.

Because of the big jump days, I think your idea and the writer you posted of starting to take a position before that turn could make a lot of sense. One morning we will wake up to a 10% jump, but of course prices could keep going down also.