December 6th, 2023

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Technical observations of

Natural Gas and XNG

Many commodities and related stocks have strong seasonal characteristics. When they fail to react normally around such periods the anomaly can be even more helpful in the ongoing analysis. In the case of the Natural Gas price there are typically two rallies; February trough April and August through October. When the August rally is delayed the next best window for a bottom has been around the Labour Day weekend. Once prices turn higher starting September 2nd, then look for the rally to last a minimum of eight to 12 trading days. The bullish divergence in the related stocks suggests that the rally could last through October.

The following charts of futures contracts, adjusting for the monthly rollover, display April 1st through December 1st of the years that declined to new lows in the second half of August (2007, ’04, ’01, ’98, ’96 & ’94).

Currently there is a distinct bullish divergence between the price of the commodity and the associated stocks as represented by the XNG. The three years that exhibited such characteristics in the second half of August were 2007, 2004 and 1996. In each instance the XNG rallied well through October and was up by 26% through the end of November. The upside target for this year becomes 689. Any pause in the current rally would be considered a buying opportunity. A violation of the 560 support would be considered to be outside the bullish pattern and warrant a liquidation of trading positions.

Years with bullish divergences in August

2007 2004 1996

The opinions in this report are solely those of the author. The information herein was obtained from various sources; however we do not guarantee its accuracy or completeness. This research report is prepared for general circulation and is circulated for general information only. It does not have regard to the specific investment objectives, financial situation and the particular needs of any specific person who may receive this report. Investors should seek financial advice regarding the appropriateness of investing in any securities or investment strategies discussed or recommended in this report and should understand that statements regarding future prospects may not be realized. Investors should note that income from such securities, if any, may fluctuate and that each security’s price or value may rise or fall. Accordingly, investors may receive back less than originally invested. Past performance is not necessarily a guide to future performance. Neither the information nor any opinion expressed constitutes an offer to buy or sell any securities or options or futures contracts. Foreign
currency rates of exchange may adversely affect the value, price or income of any security or related investment mentioned in this report. In addition, investors in securities such as ADRs, whose values are influenced by the currency of the underlying security, effectively assume currency risk.
Moreover, from time to time, members of the Institutional Advisors team may be long or short positions discussed in our publications.


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December 6th, 2023

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