Natural Gas continues full steam ahead, now just shy of doubling in price since its June low
Remember, these are technical comments only. Just as you must be aware of fundamental data for the stocks we recommend based on technical criteria in the report, so too must you be aware of important data regarding delivery, market moving government releases, and other factors that may influence commodity pricing. We try to limit our technical comments to the most actively traded contracts in advance of delivery, but some contracts trade actively right up to delivery while others taper off well in advance. Be sure you check your dates before trading these contracts. For questions regarding this section or additional coverage of commodities email james.west@dorseywright.com.
Data represented in the table below is through 10/20/2020:
Broad Market Commodities Report
Portfolio View - Commodity Indices
| Symbol | Name | Price | PnF Trend | RS Signal | RS Col. | 200 Day MA | Weekly Mom |
|---|---|---|---|---|---|---|---|
| CL/ | Crude Oil Continuous | 41.46 | Positive | Buy | O | 38.34 | +2W |
| DBLCIX | Deutsche Bank Liquid Commodities Index | 281.50 | Negative | Sell | O | 267.76 | -1W |
| DWACOMMOD | DWA Continuous Commodity Index | 534.86 | Positive | Buy | O | 468.41 | -193W |
| GC/ | Gold Continuous | 1913.70 | Negative | Buy | X | 1760.48 | -9W |
| HG/ | Copper Continuous | 3.14 | Positive | Buy | X | 2.67 | -5W |
| ZG/ | Corn (Electronic Day Session) Continuous | 409.00 | Positive | Buy | O | 347.92 | +9W |
Natural Gas continues full steam ahead, now just shy of doubling in price since its June low
Natural Gas NG/ futures have almost doubled since posting a low in June of this year around $1.45 per MMBtu (one million British thermal units). Tailwinds for the space include weather induced and economic related supply curve changes, in addition to the upcoming transition of season for many areas given the commodity’s inherent role in fueling power plants.
Pivoting to a few charts, beginning with Natural Gas Continuous (NG/) we note a series of three consecutive buy signals, with the latest propelling the commodity to match its highest chart level since February of 2019. Weekly momentum also recently flipped to positive, joining monthly momentum which has been positive for five months now. Furthermore, despite the sharp gains, NG/ remains within normalized trading levels with an Overbought/Oversold (OBOS) reading of 43%. If fortunate to pick up exposure in June one may be sitting on a gain north of 75% at the moment; however, ETFs offering exposure still possess low fund scores and remain well-below their trend lines. A few things to consider on this divergence are the possibility of negative roll yield (a topic previously explained here) or more simply which contracts the underlying ETFs hold. Also, note some ETFs, like the First Trust Natural Gas ETF FCG, actually hold exchange-listed companies that derive a substantial portion of their revenues from the exploration and production of natural gas (Source: ftportfolios.com). So like other areas of the market, knowing what you own is key along with selective exposure.
