Natural gas has only done this twice in the last decade, and it could mean more pain ahead, charts suggest

Environment

In this article

Natural gas prices are making some unnatural moves.

After a nearly 40% rally in the last month — an unusually outsized move for any commodity — the charts are now flashing warning signs, Miller Tabak’s Matt Maley told CNBC’s “Trading Nation” on Thursday.

Natural gas prices fell by about 3.5% on Thursday after climbing nearly 4% in the previous session.

“Even though I’m bullish longer term, I just think the thing has become overbought,” the firm’s chief market strategist said.

When natural gas prices spiked Wednesday, their relative strength index reached 80, a level that has “signaled near-term tops” throughout much of this year, Maley said.

“On its weekly chart, it also got above 80, and that’s the second highest, the second-most overbought it has been in a decade,” Maley said.

“This doesn’t mean that the bull market is over for this commodity. I just think that when you get a weekly chart that’s that overbought, the pullback’s going to last for more than a couple of days, and [Thursday’s] pullback I think won’t be the end of it,” he said. “We’re going to have to see a pullback that lasts for more than just a few days.”

The commodity found another long-term bull but near-term worrier in Nancy Tengler, the chief investment officer of Laffer Tengler Investments.

Her firm recently launched a green energy-based product for its clients that owns some natural gas stocks but hedges them with oil, she said in the same interview.

“I think we are due for a pullback, but long term, this is a relatively clean solution to energy, and I think we’re going to continue to see strength in natural gas over the coming years from a fundamental standpoint,” she said.

Disclaimer

Articles You May Like

Trump wins reduction in $454m bond and has deadline extended
Thames Water boss refuses to rule out bill increases of up to 40% to secure company’s future
NFL experts debate free agency: Most improved teams, plus picks for best and worst signings
Americans love Tesla wall chargers – and charging at home – study
Putin says all four gunmen held after 133 killed in Moscow attack – as he blames Ukraine