Natural Gas: 06/07/2017

2017-06-07_15-06-34

The chart above presents my phasing analysis on Natural Gas. it seems evident that we recently put in a 54 month cycle trough and this market is scheduled for a significant rally going into May of 2018. Many people would call me crazy to try and make sense of this extremely volatile (and flammable) commodity. I personally favor the long side of natural gas going forward for a swift rally analogous to the rally that took us into the peak in late 2005. It is also worth noting the similarity of the previous 54 month cycle with the one that has just unfolded. Both formed a straddled trough and the correlation of both advances going into the straddle is over 87%. The previous 54 month cycle also indicates a swift and abrupt rally although it is projected to peak sooner than the projection presented above. It is important to note that the more cycles one takes into context the better the forecast hence I will keep the 54 month cycle projection in mind but I will put more weight on the 18 year cycle position. It is also worth noting that we are currently in the final 54 month cycle correction that will put in a Kondratieff cycle low after it terminates and the market should stage a multi decade advance after such a trough is realized. For now I like NAT GAS for a short term spike that is likely to push into the second quarter of 2018 as mentioned earlier.

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The chart above presents the 54 month cycle FLD along with the projection. This FLD was recently taken out on the upside suggesting that we indeed realized a trough of the 54 month duration. It is important to note that the projection based on the FLD break takes us right into the target depicted by the projection line which makes the $5.50 handle a high probability target zone for the prices of natural gas. I will go out on the limb at state that the $5.50 handle will be reached by or before May of 2018. So let us see how that call works out!

Ahmed

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