1-19-2012: Natural Gas lost 25% in the last week. As we mentioned a few days ago, the Natural Gas is our trade of the week.
However, the Natural Gas might have moved too much. When markets get this oversold, I tend to expect a pullback in prices. You can judge an oversold market by using Bollinger Bands. When markets hit a 3 Standard Deviation Bollinger band, markets are far away from normal prices.
The gas moved 25% in just a few days, so the Natural Gas is extremely close to the 3rd standard deviation band. We are going to remain with the trend, but be aware this trade could reverse very quickly.