More positioning

Taking a more bearish tone.

Sold VLO for a 40% loss. ouch. I'll get this one back in the low teens.
Sold AA for a 20% profit.
Sold GDX for a nasty 25% loss after the put options I wrote last month got exercised.
Lightened up on AUY/UNG a bit.
Short SSO.

My spec account is now "hedged".

More position changes

Added to my UNG (natural gas) position since it is forming the final end of a bullish wedge, 1000 total now.
Sold my ACI (Arch Coal) position for a modest 15% profit to make room for the UNG.
Sold my DGP (Double Long Gold) for a modest 5% profit.

I am taking a bath right now on my additional AUY (Yumana Gold). But I am holding strong.

More action

Wrote four June 42 GDX (Gold miner ETF) puts at $1.2 a piece.

Sold a single lot of GDX to make room in margin.

Added another lot of UNG at $13.89.

Added another 200 of AUY at $11.20.

Natural Gas Double Bottom

Looks like a very nice double bottom on natural gas, with the second low being made about 0.5 cents higher than the first. Target on UNG is $20.

More on natural gas

Take a look at this chart. This is chart of the crude oil / natural gas (NG) ratio. Whenever the ratio gets near 14-15, natural gas outperforms oil. Whenever the ratio gets below 7, oil outperforms natural gas.


We recently registered over 15 two weeks ago, at 15.41. This signals that natural gas will outperform oil on a relative and likely absolute basis.



Let's take a look at the other inflection points:

15.75 in Sept 06 to 6.78 in Nov 06: Oil ~0%, NG +105%: NG REL/ABS OUTPERFORM
6.78 in Nov 06 to 15.92 in Aug 08: Oil +146%, NG +54%: OIL REL/ABS OUTPERFORM
15.92 in Aug 08 to 6.01 in Dec 08: Oil -72%, NG -52%: NG REL OUTPERFORM
6.01 in Dec 08 to 15.41 in Apr 09: Oil +35%, NG -46%: OIL REL/ABS OUTPERFORM
15.41 in Apr 09: NG will outperform on a relative and likely absolute basis

The play? I like being straight long Natural Gas (UNG). If you want to be hedged, short crude (USO).

I'm calling the bottom in nat gas...

...and thus, I bought some UNG @ $14.2o this morning