tradedragon

Short Natural Gas $2.90 September Call @ $0.128 credit

2015-07-12T09:54:00.001-04:00

Short Natural Gas $2.90 September Call @ $0.128 credit. This allows a nice profit as long as Natural Gas remains below $2.90 by end of august.

The probability of Nat Gas breaking $3.00 is low given the abundance of the commodity, with the latest injections being higher than historical norms. Latest build was 91 vs. 75 historical (last 5 years).

The moderate summer is helping to push up inventory build. This is on top of a larger than normal supply rush from all the wealthy 2010 - 2014 drillings.

Selling Oil Futures ITM Call Options for a high probability bearish trade.

2015-07-12T09:44:00.002-04:00

View on Oil: Bearish for next few weeks due to supply concerns from Iran and increasing rig counts.

The short term resistance is around $56.53 as drawn out on the chart below. In order to reduce risk on our bearish position, I am looking to short the September $53 in the money (ITM) call option which is trading at around $3 at the moment. This would limit our losses which will only begin once the contract trades above $56.

Meanwhile, we will be able to capture strong delta from this contract and earn $3 if the contract closes below $53.

Should oil continue to slide below $50, I will look to short the then current futures to maximize our profits in the downtrend.

Chart: Crude Oil Chart

Natural gas, a gamble on the weather.. Forecast $4.50 this summer, $6 end of the year

2013-06-28T23:57:00.000-04:00

Since my call for a rally in natural gas, the commodity has smashed downwards instead...

This commodity is indeed a gamble against mother nature. This year, somehow, summer is not as hot as it needs to be. While it is warmer than usual, it is not warmer than the 5 year average.

Nevertheless, this week we will see California and Arizona suffering from a scorching heat wave that might lead to record breaking high temperature. This might help revive hopes of a bullish rally.

The fundamental reason behind my natural gas gamble is due to a few reasons which I would like to list down again.
1. Natural gas rig count has been declining and is now hovering at 350, much lower than the peak at above 1,000. This week's rig count showed a slight increase but horizontal gas rig continued its decline. This means that we will be seeing production decline really soon.
2. It is uneconomic to drill for natural gas at this level. While many of the marcellus operator claims IRR of 20% at $3.50, this is unproven as the shale area has only been in existence for 4 years. The Marcellus wells have extremely high decline rates. A suggested break even level is $5 - 6 as noted by industry experts in my earlier posts.
3. Nat gas demand has been rising as industrial activity picks up in the US. More coal plants have been decommissioned permanently and is substituted with natural gas plants. The coal-to-gas switching will be permanent by 2016
4. Obama's support for natural gas and impending export of the commodity in 2016
5. Increased export to Mexico with 7.0bcf capacity by 2014 vs ~3.5bcf today
6. Easy-to-drill wells have been exploited, leaving the harder ones behind which might lead to higher drilling cost in future

All in all, we will see a decline in production very soon while demand continue to rise. This is a great set up for a natural gas spike just as it has happened several times in the course of its trading history. This will be a report of the 2001 natural gas spike.

I see $6 as a potential target by December and $8 as an optimistic target.

I suggest to long UNG and UGAZ. I have positions in these ETF as of this writing.

Leaked Documents Featured in NYTIMES on why Natural GAS is uneconomic at this price level

2013-06-16T11:43:00.000-04:00

http://www.nytimes.com/interactive/us/natural-gas-drilling-down-documents-4.html?_r=0

Take a look at the major disconnect between prices and drilling. This is why rig counts will not pick up until gas prices jump to $6 and beyond.

My forecast: $6 spike by end of the year. (a bold forecast but 75% possible)

Many people have been betting on a spike since 2010. It has been 2.5 years, I think it will happen this year.

Buying Natural Gas here... $5 during the summer

2013-06-16T09:56:00.001-04:00

Update: Week of June 17, 2013

Natural gas declined last week due to anticipation of above average injection. The injection numbers came in at 95bcf which resulted in a sharp short covering. However, bears continued to dominate on Friday, resulting in a ~2% drop.

I see this a short term test of the downside and possible due to the cooler weather outlook which translates to above average injections again.

Nevertheless, I continue to be bullish on Natty due to these reasons:

1. Shale gas production decline (very soon), other than the marcellus region, all other shale plays are experiencing production decline.

2. Low rig count 353... there is usually a lag of about 6 months from rig count to injections number. 6 months ago, rig counts declined... so we are going to see production decline starting to kick in soon.

3. Increased permanent coal - gas switching

4. Summer heat is coming... natural gas is pressured to rise

BULLISH - China, Natural Gas

2013-05-30T11:33:00.002-04:00

I am currently bullish on China, Natural Gas and USA in general. I think the QE fears have been overblown by the markets. The FED will know how to ease their QE and continue to pump the markets.

China is trading at a steep discount to other emerging names including Indonesia, Vietnam, thus I am recommending to buy into Chinese Markets.

ETFS to consider are YINN, CHIX (China) and UNG, UGAZ, BOIL (Nat Gas)

Natural Gas Short, Crude Oil SELL

2013-02-11T03:50:00.001-05:00

Natural gas could go below $3 due to the surprisingly warmer than usual winter. many trades thought that the temperature was colder than last year, resulting in strong bullish support in previous months. However, it is very much clear now that there's a huge oversupply of natural gas.

Demand of oil is not picking up as thought by many analyst. This is a good opportunity to continue shorting Crude Oil. We should see it dive down to $90 from here.

Shorting Crude Oil at this level

2013-01-05T11:12:00.000-05:00

Crude oil has rallied to $93 - $94 levels recently due to the fiscal cliff resolution and better economic indications in China and the US.

However, I believe that the market might have overpriced oil at this level.

Shorting as there is an oversupply of crude oil in the US, weak demand from US manufacturing.

The european crisis is not over yet and we might be overbullish at this point.

Target - $85

Time Frame - 2 months

The market is bound to correct soon and VIX might soar past the 20s.

Bullish on the impending Semiconductor Rally

2012-11-18T13:18:00.000-05:00

The markets have been hammered post OBAMA's re-election. Semiconductors have been the hardest hit as portfolio managers take advantage of the declining market sentiment to increase their short exposure in this space.

However, I believe that the semiconductor index (SOX) is due for a rebound especially given how low many semi conductor stocks including INTC are trading at.

The catalysts for the rally are the following:

1. Windows 8 to start selling after customers are educated by word of mouth of the benefits of converting to the new OS.

2. Thanksgiving holiday buying season would help spur the adoption of Windows 8.

3. Mobile growth, more demand of semis for electrical appliances.

4. Technical rebound.

QE3, Market Rally, Inflation

2012-09-15T11:47:00.000-04:00

With QE3 finally announced with strong conviction, the market is most probably going to rally for the next 3 months.

What we might see in the near term is short covering as market participants renew their bets and buy back short positions so as to limit their downside risk.

As the Dow and S&P have made new highs, short squeeze is inevitable. While some shorts believe that the market should correct downwards, they are also panicking as the many cash in the sidelines are driving demand for risks.

What we should see -

Market rally,

USD weaken,

Inflations

BUY CYCLICALS and commodities. Short USD.

Time to be bullish

2012-08-24T12:02:00.001-04:00

Technical levels

DOW to break beyond 13300 to 13800.

S&P 500 to touch 1440.

Catalyst

- Easing in China, Europe, USA
- Improving commodity margins signaling pickup in supply/demand equilibrium (i.e Tamed supply, increasing demand)
- Tech supercycle from PC (Windows 8), iphone 5 refresh

Bull Meter

Cramer is super bullish.

Bear Meter

Dennis Gartman.

NO QE3 yet? Only Operation Twist

2012-06-20T14:54:00.000-04:00

This will spark the next bear market until the DOW reaches 11800 in my opinion.

This is because the FED only decided to extend operation twist and perhaps launch QE 3 in September.

The FED only wants to support the market. Since the market is way up high, there is no reason for the FED to pump equities yet. As a result, it will wait for disaster such as the DOW falling to 11800 before it announces QE3 and thereby pump all US stocks again and all other assets.

Grim Reaper meets the US stock market

2012-06-11T16:06:00.000-04:00

The European debt crisis has summoned the Grim Reaper to the US stock market. Stocks are taking a big hit today despite great bailout news from Spain. It seems that the market participants are more cautious about the bailout contagion which could spread to Italy.

- ITALY is next in line (perhaps)

- China cannot grow fast anymore (most likely)
China's growth was fueled by enormous infrastructure expenditures which cannot provide sustainable growth.

- US dollar strengthening might destroy Commodities prices which will affect commodities players.
- US debt to GDP improving (++++)

Emerging markets play is not as exciting as before.

What to do?

Wait for the US market to meet its deadly fate. The DOW should be dropping another 5% at the least from this level.

This is purely based on my opinion.

Chipotle: the ultimate bubble

2012-04-13T15:03:00.001-04:00

Chipotle is by any chance the most overvalued stock now. This stock is Netflix is number 2.

Keep watch for a plunge. I will be a short when Chipotle strengths weaken. It may be coming soon. Wait for a little more bubble first.

TRIPLE TOP and PANIC

2012-04-11T01:58:00.001-04:00

The techinicals of the DJIA is extremely bearish. A triple top has occurred at the 138.2 level of that FIB line which I have drawn on the chart below. The DJIA could drop to 12250 or even lower to 11800. This is the panic that I have been waiting for.

In the past months, US equities have been very bullish. The markets kept edging higher and higher. People were getting complacent as evident from the low VIX. At that second top, noob investors were trying their luck to bring the market higher. The psychology here is that stocks always go up in price. However, it failed, and noobs were getting owned by short traders who started toying on fear. Now we finally got a bearish short term market.

IDX - take profit soon at $30

2012-03-27T00:06:00.001-04:00

I would take advantage of the bullish market to take some profit off stocks as I see an impending correction.

Take some profit from my IDX which had a great buy price of $28.40.

Justin Bieber's Company? OPMG.. sounds like OMG

2012-01-28T23:59:00.002-05:00

I have finally found a company that has Justin Bieber in the Management team. click the link below.

http://ir.stockpr.com/optionsmedia/management-team

The company is a penny stock listed in the OTC market.
Options Media Group Holdings, Inc.

OPMG is the stock ticker if you plan to buy this penny stock but I think it is a bad stock to invest in.

The business Idea is so funny... PHONEGUARD.

I am not sure if it's going to be able to grow.
Enjoy the video.

S&P 500 chart review. We are in correction phase.. i think.

2012-01-28T18:12:00.001-05:00

This is my technical chart for the SPY.

I will consider buying stocks when it has corrected to 1245

IDX – $28.45 Buy Entry

2012-01-28T13:56:00.001-05:00

Should the global equity markets continue its bullish rally, IDX is a buy when it corrects to $28.45.

CLF $66.50 Buy entry

2012-01-28T13:48:00.001-05:00

I did a technical analysis on CLF chart to get back into the stock.

The fundamentals of CLF remain strong given its healthy balance sheet and demand for iron ore.

The suggested buy entry is based on Support line as shown by the 3 circles and the Fibonacci retracement lines of 38% and 62%.

Take a look at the chart for yourself.

DJIA Minor Correction to 12400

2012-01-27T13:40:00.001-05:00

The recent bullish rally has been stopped by the poorer than expected GDP report of 2.8% instead of the 3.0% that Wall Street wanted.

Furthermore, the Dow Jones Index has hit a previous resistance set in May 2011, a correction is expected as buying pressure eases and profit takers start to unload shares.

Based on Fib 38.2% retracement level and previous support levels as shown by the blue markings, I strongly believe that the DJIA will correct to 12400.

Dow Jones Industrial Bullish TARGET - 13250

2012-01-14T19:59:00.001-05:00

After drawing several trendlines on the DJIA, it seems that there is a point that has many intersections and I have drawn 2 as shown in the chart below. The point is 13250 and that's my prediction of the DJIA by March. This is a long term bullish trend. I will analyze for shorter term trades soon.

Restart S&P and DOW technicals

2012-01-11T19:51:00.000-05:00

Hi all,

I will soon begin to cover S&P, DOW and some ETFs technicals.

For now, I am still on holiday. Happy trading.

TRADEDRAGON

Make 10% monthly by Selling Options Credit Spreads

2012-01-02T09:37:00.003-05:00

Selling Options Credit Spreads is a low risk strategy that takes advantage of the time decay in Options. I have successfully made at least 10% per month using this strategy.

What is a Credit Spread?
A credit spread is a trade in which you simultaneously sell one option and buy one option for a stock as a single transaction. The options are traded for the same expiration month, with different strike prices and are either both call options or both put options. You write the more expensive option, and buy the cheaper option, resulting in a credit to your account.

Examples:
Bear Call Credit Spread
Trend analysis shows that Stock A is in a strong bear trend. A is trading at $100 per share, towards the end of November.

TRADE:
Sell A 110 DEC Call for 0.80. Credit $80
Buy A 115 DEC Call for 0.30. Debit $30

Net Credit $50

You keep $50 when the Options expire.

Bull Put Credit Spread
Stock B is in a strong bullish uptrend. B is trading at $100 per share, near the end of November.

TRADE:
Sell B 90 DEC Put for 0.80. Credit $80
Buy B 85 DEC Put for 0.30. Debit $30

Net Credit $50

You keep $50 when the Options expire.

S&P technicals

2011-12-06T09:31:00.001-05:00

Due to requests from old timers who miss my simple chart analysis.

Here is the technicals for S&P. We are approaching a strong resistance point. A break through that would confirm a positive year for 2011.

We should not make any trade decisions these few days until a clear break of that line. I suggest taking on risk if it breaks the line. –--- metal stocks are good risk play.