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Natural Gas Hurst Cycles


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#1 SilentOne

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Posted 10 June 2009 - 11:40 AM

Natural Gas has been a tough market to call near its lows with crude printing above $70. A oil/NG ratio I like to follow has hit 20? I always thought a ratio of 14 - 15 was a screaming buy.

Anyways, I have not been able to figure out what the larger cycles for NG might be up to. But I am starting to like this possibility here. The first premise is that NG and crude have similar cycle periods, ie. 14 days, 28 days, 11 weeks, 22/23 weeks etc. The second assumption is that NG cycles are offset from crude much like gold and silver (if you didn't know that, they too follow different cycles which are offset IMO).

I have to assume that NG topped out just as the 44/45 week cycle was arriving which was very bearish, even more bearish than what happened to crude. It meant that NG was headed down for the next 45 week cycle until the larger 88/90 week cycle arrived. This cyclic picture makes a lot of sense and would explain the cyclic action IMO. So with NG headed down now for 45 weeks from the 2008 high into this years low, one has to wager that it printed its 45 week low in late April.

If that is the case, then from last summer's top and a 90 week low going back to Sep. 2007, NG should be seeing major cycles lows here and they may have already arrived late April. Tomorrow's inventory NG report will be a key test for this idea. I'm long a partial position here today at 14.08.

cheers,

john

P.S. I have included my last weekly phasing for crude to show the offset idea.

NG_weekly_45_and_90_week_cycles.png

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"By the Law of Periodical Repetition, everything which has happened once must happen again and again and again-and not capriciously, but at regular periods, and each thing in its own period, not another's, and each obeying its own law ..." - Mark Twain

#2 SilentOne

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Posted 10 June 2009 - 11:47 AM

I have to add the caveat here that when major cycle lows arrive, they can distort and extend. So if the late April lows do not hold, then crude will be down for the next 28 day cycle. Seems hard to believe, but this is possible. I like the odds here though and will go with a partial position. cheers, john
"By the Law of Periodical Repetition, everything which has happened once must happen again and again and again-and not capriciously, but at regular periods, and each thing in its own period, not another's, and each obeying its own law ..." - Mark Twain

#3 SilentOne

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Posted 10 June 2009 - 12:01 PM

Should say ... "So if the late April lows do not hold, then NG will be down for the next 28 day cycle."
"By the Law of Periodical Repetition, everything which has happened once must happen again and again and again-and not capriciously, but at regular periods, and each thing in its own period, not another's, and each obeying its own law ..." - Mark Twain