A high percentage play in natural gas

摘要

By now, anyone who has read a financial newspaper or watched CNBC for more that 30 minutes over the last three months should be familiar with the long-term supply issues facing natural gas. Even Alan Greenspan weighed in on the issue earlier this summer, stating that he saw little prospect of natural gas prices receding significantly in 2003. All of this press coverage of the natural gas "situation" has brought waves of small speculator capital in and out of the market, trying in vain to trade the evening news. In late June, the Commitment of Traders reports were showing small spec long positions at or near record highs. When small specs are betting heavy on the long side of a market based on intense media coverage, it can often (but not always) be a strong indicator that the market is setting up for a big fall. This turned out to be the case when higher than expected storage builds set off several rounds of sharp liquidation in the natural gas pit.