Folks, you don't often get the opportunity to participate in the bottoming process of a great depression in the value of an asset class. In fact, it's a once in a life time thing for most people. We are now seeing it in gold. Soon we will be seeing it in energy as well. The glut was so big that it has caused a historical shut down, albeit it temporary of course, of FUTURE production growth. I predict that at some point we will go from a glut to shortages very quickly. These are the wages of allowing a fake money supply: economic turbulence. We are not there yet but remember what I said: it is coming.
When everyone knows what the money is worth, how can there be price turbulence? But when entire banking systems rapidly cycle from being called "safe and sound" to suddenly finding out that they are nothing more than feathers in the wind then everyone has to get caught up in the pump and dump. If stocks and commodities were not volatile would there be entire groups of private individuals trying to extract a living from the daily moves? Of course not. STABLE PRICES ARE BAD FOR TRADERS. Stable prices are the death of Wall St. They and their cohorts at the fed say they want stability but that is bullshit. They want turbulence and their whole system is set up around it.
Don't call it a conspiracy theory. It's not. It's just fact. Look, any of you who know the art of the deal know I'm right. If you see a weakness that is legal and institutionalized, you take advantage of it and you nurture it.
And then you deny it so that the common man and woman, AKA Mark and Patsy, don't catch on.
So that is where we find ourselves. Valuable assets are impossible to put a fair market price on not because people don't understand that the assets are important and have huge value but rather because we don't really know who will end up owning them. The assets of ORIG and SDRL are, no doubt, impressive and valuable but since they were borrowed into existence the traders worry that they will be defaulted on back out of existence (or at least into the hands of a new owner who owes the prior shareholders jack $hit).
My point is that the valuation swings happening right now are mind bending. And we know the reasons why. We should not be shocked, we should embrace it because that is the current reality. People used to be happy with 10% per year. Now a good trader wants 10% a month. Bottom line is that you are in the right place at the right time doing the right thing and there is a lot of wealth to be transferred to you IFF you do it the right way. Buy low, sell high, and manage risk all as defined by the rules of the Elliott wave principle.
Nat gas is currently near the B of 4 wave. And it has been a deep B because the A wave was a screamer. So we definitely had a motive wave up into mid Jan and it went up like the space shuttle. Since then in the nat gas cash market we have seen all or nearly all of an a-b-c into B of 4. I suspect that the gap will be treated as filled with today's AM thow under of the lower rail but I am vigilant for signs that we could need one more small push down. Oh yeah, and I'm always on the lookout for signs that something unexpected is happening. Trust but verify.
When nat gas reverses upward it should occur as a motiv C wave. Keep your eyes on the prize! It should be 5 waves up off the bottom that just go-go-go. Expect gaps up. C is generally the strongest wave in a retracement even if generally equal in length to A. So the strength often comes in terms of price move per unit time and anyone who plays options knows that options love fast moves per unit time. That is why UGAZ will likely triple+ in the next move up.
The cash market target is the level of the prior 4th so we will use this to help guide our sell point for UGAZ. If we see this, happen, GET OUT and stand back. If we get this C wave, calmly assert your understanding of EW reality by taking profits and then looking for 5 waves down to a lower low to get back into UGAZ. At that time we can consider longer term holding strategies as discussed in this weekend's special update on natural gas.
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