Copyright Creative Breakthrough, Inc. 2010.
Yesterday we pointed out that Wheat was setting up nicely as a “long volatility” play in the second half of the year. But where there is one opportunity there must be others. “Long volatility” it’s all about “tradability” for a particular type of trading strategy. I have found over the years that breakout systems are popular, easily to understand and easy to trade and can be a real source of trading profits, if you got the right market at the right time. As a results of the bigger daily high to low range there is simply more money to be captured, its basic math. The more expansive the market condition, the better suited the majority of popular trading systems.
Natural Gas may turn out to be one of the biggest plays “price wise” just not in the second half of 2010 but it may turn out to be the decade of natural gas as opposed to oil and unleaded. But I will leave that for a future commentary.
The price action after the most recent major bear market is wedging out a based since October of last year. Such price action will lead to a prolonged period of increase volatility or range expansions. Any move here above 5.20 would be a positive, but unless it was accompanied by a “momentum surge” – where RSI and other similar indicators reach radically high over bought readings plus standard measures of volatility move about their highs of the last 6 months, the rally would be suspect. I would prefer to see one more new low followed by the change of conditions noted above.
Jack F. Cahn, CMT
TraderAssist®
Since 1989, Creative Breakthrough, Inc. CTA
