UNG / DGAZ looked like the perfect pullback (UNG) trade off a H&S volatility shakeout, however these recent polar vortices have been causing some havoc, even though UNG is my long term trade of choice (long) and I still keep the core position in place for trend trades.
UNG has had good signals, and the H&S top/break/volatility shakeout is such a common set up, it looked like DGAZ would be a very reasonable pullback trade (UNG pullback).
Over the weekend as the next set of these cold fronts were forecasted you can see Natural Gas Futures were accumulated as futures opened Sunday night for the new week, being the US was closed Monday, that created a decent gap up Tuesday.
The DGAZ position is causing too much drawdown for the trading portfolio, it's at 4% portfolio loss which is double what it should be.
My thinking as of now is that the weather is being discounted as UNG is up, tomorrow morning is the EIA Natural Gas report comes out, the best scenario would be a sell the news reaction as it seems the weather is already discounted. So I'll give the position until tomorrow to make that decision.
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