Nearby natural gas has been in what looks like a free-fall capitulation for the last four sessions and, in fact, plunged to test its April 2012 low at 1.90 in overnight action prior to recovering to 2.07 in pre-market action.
With the November contract expiring Wednesday afternoon -- while recognising the near $0.30 premium of the soon-to-be front-month December contract -- it is very risky to enter long natural-gas positions at this time.
Although the huge short position in natural gas is ripe for some serious short-covering pain, it might just be prudent to wait for Wednesday's December rollover -- into its first or second day of trading -- prior to considering a low-picking expedition in natural gas.
Perhaps 1.95-1.90 will be tested again, and again, in the upcoming days before a really explosive short-covering rally?
