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Nat Gas Flash Crashing
Nothing like a little flash crash in nattie on no news to spice up the day of 10% staffed trading desks. Margin calls anyone?
Not surprisingly, Cramer was out on Friday pitching nat gas.
And here is the WSJ speculating that another fund collapse hit the market last week:
The rally in natural-gas prices has caught many hedge funds flatfooted,
sparking a string of unexpected losses for top-name players.
Morgan Stanley Smith Barney clients invested in a $640 million group of
funds that have emerged as some of the biggest losers in the turmoil.
Hedge funds known as "trend followers"—which chase market movements,
rather than making fundamental investment decisions —also appear to
have been hurt on bad trades.
Earlier this year, traders and portfolio managers across the Street
rushed into natural-gas trades, with the "consensus opinion" that
prices would continue to languish.
For most of that time, the bet proved a surefire winner—gas prices
tumbled 22% in the first five months of 2010—and investors piled in.
The trade was so popular that by May 4, the overall sum of speculators'
bets flipped from wagering on a price increase to the opposite, or a
"net short" position, according to the Commodity Futures Trading
Commission.
Traders believed that an increase in production and mild consumption
would continue to weigh on prices. Instead, prices shot up 15% in June
amid forecasts for the hottest U.S. summer in 30 years, which would
increase demand by power plants that use natural gas to generate
electricity. There also were predictions for a flurry of hurricanes,
which could cause halts in production.
Trading natural gas has long been considered a game for the strong
willed. The commodity fluctuates wildly—for example, last August it
lost 40% before jumping 93% in September.
One specific trading favorite, betting on the difference in pricing
between a summer and winter contract, is known in the market as the
"widow maker" for its perilousness. That particular bet brought down
Amaranth Advisors in 2006, one of the biggest hedge-fund collapses in
history.
Speculation about another fund collapse hit the market this week, with
traders guessing that funds were forced to close out their positions.
"You definitely had a large number of institutional shorts in this
market. This rise has caught some of these participants by surprise,"
said Teri Viswanath, director of commodities research at Credit Suisse.
Five funds housed within Morgan Stanley Smith Barney, investment pools
catering to clients of Citigroup Inc. and Morgan Stanley, have lost
$120 million or more this year on energy bets, based on assets detailed
in public filings.
The Bristol Energy Fund, which as of the end of March held some $500
million in assets, and several smaller funds managed by Houston-based
hedge-fund manager SandRidge Capital suffered as natural-gas trades
went against them. Big SandRidge funds lost some 15% in the first half
of this month, bringing the firm's 2010 decline to about 19%, Reuters
reported.
"The manager has experienced a difficult performance this year, and in
particular this month, but since we have been working with them, they
have generated a positive return for clients," a Morgan Stanley Smith
Barney spokeswoman said. She wouldn't comment specifically on the
funds' performance. SandRidge couldn't be reached for comment.
Superfund USA, which runs several managed-futures portfolios with $1.25
billion in assets, has been shorting gas this year. The fund lost money
on its natural-gas position, which accounts for 1% of its total assets,
in April and May, before being forced to close out the position in late
May by its technical signal, said Paul Wigdor, chief investment officer.
On June 4, Credit Suisse recommend investors short natural-gas for
October delivery, saying the rally had gone too far. The contract was
then trading at $4.94 per million British thermal units, and has gained
4.3% since, settling Friday at $5.153.
"In hindsight, we were probably a little bit early," said Ms. Viswanath
of Credit Suisse. "Our failure was in underestimating the strength of
this particular rally." The Swiss bank still reckons that there will be
a correction in gas prices before the end of October. Some funds have
profited by chasing the upward momentum.
Tim Pickering, president of Auspice Capital Advisors, said the firm is
"doing great on natural gas." Auspice runs a natural-gas
exchange-traded fund and a diversified commodity fund. The $232-million
Claymore Natural Gas Commodity ETF was up 7.4% since the end of May.
London-based BlueCrest Capital Management LLP was up about 2% this
month as of mid-June, and more than 3% for the year, in its $10 billion
BlueTrend Fund, helped in part by natural-gas trading gains, a person
close to the matter said. That followed a loss of about 8% in the fund
for May.
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pussy move for nat gas
So is gold and silver.....
Sorry to be a broken record: The Evil Empire will do ANYTHING to keep gold under 1250. Any opportunity to sell and paint the tape they will take.
Agreed. And Op/Ex is coming up. One last time for JPM? I wonder if MC squared is invited to their discos?
Daft Punk - One More Time:http://www.youtube.com/watch?v=lH-0s0pRleg
1225 here we come
How the hell are equities holding on? Platinum.....
All the previous flash crashes in the equity market, mini or large, were preceeded by flash crashes in the PMs (gold/silver/platinum), except on the day when TD uncovered the massive moves by the banks to pump stocks. That day PMs crashed but not equities due to the said pump.
I am expecting TD to inform us that this is the case today.
BAT SIGNAL TYLER!!!!!!!
Gold/silver breaking resistance.....
And I have 1st support at $18.88 and $1243 respectively. 2nd support $18.80 and $1235. After that it'll be old levels.
Agreed but now that they've gotten it down this far, they'll probably take a stab at 1225 overnight or early tomorrow. Bot some Aug 1300 calls at 10.0 about 30 minutes ago. I'll look to add some more at 7 or so if the run to 1225 occurs.
Looks like it could happen. Gold breaking 2nd support level now....
Hmmmm....silver ain't havin' it? Gold is following? Let me now say that this has been the standard deviation of the flash crashes. Morning crash/mid-day pump/late day crash. And yes, if the PMs crash and burn the whole market could tank quick. We could see game over later today or tomorrow. Good luck trading!
you have attention deficit disorder, am sure of it. recoginize myself in you, sometimes†
what is your profession?
I heard prisoners who keep breaking out of jail have detention deficit disorder.
Not sure if you are talking to Turd or me. He is a rockstar and Ima Super Hero, or is it the other way around?
Please explain.
Whey would they care about 1250 any more than 1300 or 1200 or 1199 or whatever?
Thanks.
Strong resistance...if it breaks 1250 with conviction and stays they will have a very difficult time keeping it from going on up to a much higher level
The same reason they refuse to let the DOW stay below 10k.
They built a line of defense there in early May. Painted the charts to look like resistance at that level by taking on substantial short positions. Above 1250, every single fucking short they have is underwater.
Thank you for the explanation.
yea gold is crashing and $DXY is ramping up. I assume one is causing the other...
"Not surprisingly, Cramer was out on Friday pitching nat gas."
so, I guess you could say he is "catching" for "nat goo" today. nat goo - get it? haha
This move is not even a one-sigma for natty. I am surprised this even is worthy a mention here. Total non-event.
Wow gold just fell off a cliff.
See above
laughing outloud.
if you want to let the NY Times know how they got played with their "Afghani treasure trove" story...and why JPM is sending a team to "assess" the potential there....
write to the reporter, Jim Risen...he doesn't have a clue, not a clue about the gold and silver markets....and what's happening.....he trying to fight off charges he got played by the Pentagon...
help the dude out....
jrisen31@gmailcom
help the dude out....
Tell him he got played by the Pentagon AND the rest of the administration.
Wow gold just fell off a cliff.
Not quite sure I would use the word 'fell'. At the very least it was 'pushed'.
OpEx bullshit. Yet again.
Looks like commodities are getting crushed ahead of the massive Treasury auctions this week.
Yup, and that would only be about the, what, four billionth time that's happened? We don't have a market anymore, we have a crime scene.
Gold is down 1.3%, but by the reaction in here, you'd expect it to be down 10%.
Its simply equal to the reaction you get when its up 1%..
i hope it will continue to decrease so i could buy some physical gold and silver to reinforce my portfolio at discount price
Everyday they supress the gold price is like a little gift to the physical bugs...This game is over soon it's the physical shorts that are driving this sucker now.
A number of quality London bullion dealers are only offering delayed delivery (that's a first). So they wait for these wallys to crush the market and then cover their short in the paper trade.
The game is all but up ... makes you wonder how it will end.
I use 10x leverage so I am down 13%
Maybe you should be called PETER CHUMP.
Mainly its the outright, blatant price manipulation by JPM and GS that gets everybody so pissed off.
Look at today's chart. The 1265 high occurred at 7:54 EDT, just like it does most days. The asshole traders of the Evil Empire come in at 7:00, drink some coffee while they decide when and where to cap price for the day, then they take action. Look at today's intraday chart. It couldn't be more obvious if it jumped out of your screen and bit you in the ass.
I'm with Turd. Same chart everyday. The City hands NY the drop and NY kicks it. Then they take it as low as possible. It's a rape over.
Mos Def - The Rape Over:http://www.youtube.com/watch?v=A39vxbWixv4&feature=related
There is a pattern if you chart it over time. Got one around here someplace....
But if it's that timely, trading gold/silver would be a slam dunk.
How come it's not?
That's why I don't trade, I just buy -- at any price.
This is why I don't use stops any more. I trade silver (as well as hold physical) and have seen the price drop by $0.25 at 7am sharp and then come right back up to where it was.
Lost my metal and will never use stops again.
It's a good thing no one actually has to use commodities, base business decisions on price inputs, or forecast future trends. Otherwise, the ridiculous swings might effect things.
Yeah, especially like food and energy. On the other side of the debased coin, everybody uses Owner Equivalent Rent.
Crude oil crashed too.
http://finance.yahoo.com/q/bc?s=CLN10.NYM+Basic+Chart&t=1d
WDSS (What Does the Squid Say) on nat gas?
I'm getting tired of this shit. Why doesn't Uncle Sugar put up on the FED's web site, every morning when he wakes up, what he wants the price of DOW, S&P, Oil, Gold and just about everything else to be and just be done with this charade.
Because then bizo-entertainment channels would not be able to propagandise the world into accepting polarizing policies.
Gotta give then something to talk about.
look at the horrific equity volumes...real money is no longer buying their shit sandwich and is either on the side waiting or going into gold. Hence this move to reverse it. Wont work we'll be up another hundred on gold before we know it.
Asset prices remaining high are now a matter of national security. TPTB think if they keep it up long enough people will believe it and eventually buy into it.
That's why I am so amazed that we get guest posts seriously studying charts and trends, etc. If the markets are as rigged as they are, if Uncle Sugar tells us what he wants teh S&P to be, if HFT's control now, probaly more than 80% of the trading, what's the point of even chart analysis?
Natural Resistance vs. HFT; the most epic of battles!
Word is sandridge blew up sometime over the past month.
Could you elaborate please?
Just normal rigged casino action.
Nothing to see here. Move along.
Yeah, July '08 was sooo long ago. Who can remember back that far? ZH is short attention span theater -- of the absurd.
ag and energy fell off due to cooler midday weather in the 6 to 10 day
Whoever was talking about shorting gold at 1250 on Thursday is looking pretty smooth right now.
Ah that would be BeerGoggles http://www.zerohedge.com/article/market-levitating-just-above-200-dma-go...
Johnny Bravo is laughing his ass off...
What's left of it that is. He got most of it gnawed off right here.
He is the proverbial stopped clock. He'll be right for a fleeting second.
also doubts as to the euro weather model re tropical storm activity in gulf for next week
First Gulf of Mexico Tropical Storm/Hurricane expected June 28-30th
http://www.accuweather.com/blogs/news/story/33015/atlantic-tropical-stor...
This oil spill is about to enter SHTF stage.
SHTC stage. Last letter being "Continent".
Looks like BigBen just got to his trading desk and saved equities for the next 10 min.
Which Big Ben? This?
http://1.bp.blogspot.com/_SbGSSRU5LeE/SOGGTogXJWI/AAAAAAAABTk/3pQeUw-ICp...
This....
http://www.visitingdc.com/images/big-ben-picture.jpg
Or this.....
http://luckybogey.files.wordpress.com/2009/08/ben-bernanke-to-be-reappo-...
The latter, that obviously left his desk to take his after lunch crap.
I forgot this....
http://www.salaam.co.uk/hajj/image/kabba.gif
Well, he better push it up fast, like within the next 2 hours. If ES closes bellow 1120 today, we'll nose dive tomorrow.
You mean that thing that is supposed to go down on bad economic data right?
The sky is falling!
You are five years late!
Started squawking (and preparing) 6 years ago. New to this venue.
Welcome friend!
You must be exhausted!
The scammers want low commodities and higher stocks. Easy with this anemic volume today, they will only need 1/4 of the servers to do the job.
Woah! Watch that ES go, I wonder if BB even took time to wipe.
The PMs made a move for the door. We will find out soon if the "M"oney "M"akers make a move to shank them. The market best be careful what it does next! This market is so fragile, and if PMs break their 2nd support levels all hell will break loose.
This is quite the shakedown....panning for gold they are.
Glad I piled on more TAZ this morning. The problem will be cutting out before the whole system crashes and I'm left holding my nuts along with a ticket that said I won and no where to claim it.
Not sure if you guys pay attention to that "other" energy "market"/casino, but...watched the Heat Cracks roof in the last week at the same time NG started going higher...there were a lot of shorts there as well. I always think it's the junior traders at the summer desks getting nervous. Alas, another summer where the heat/gas trade is a minor widowmaker as well (Sep/Sep trading nearly 5 cents to the heat usually puts the hurt on)
You realize you're explaining intricaries of the energy markets to guys who believe in conspiracy theories of governmental commodity market manipulation. Nothing you say makes sense to them unless you argue in favor of rampant manipulation. Don't waste your breath.
At any bulge bracket interns that work on the prop desk aren't allowed to make trades without consent of an associate or VP. So maybe youre talking about a boutique, but those don't have nearly enough capital to make any sizeable move.