Is the Day of Reckoning Approaching?

March has certainly started as a month of contrasts.  On the one hand, the frosty mornings, followed by warm sunshine has put a genuine smile on peoples faces and a spring in their step and on the other side, the world is in a right old mess.

Gas has unsurprisingly decided to follow the latter and is currently caught in a vicious battle, between Trump, geopolitics, macro fall out and trader positions Vs fundamentals.  Looking at the actual prices, we are still a fair bit higher than we were at the lows on Wednesday evening, but that only really tells a tiny proportion of the story. 

We had a massive rally that briefly followed through on Friday before being slapped back down pretty much all day.  Then the weekend bought Trump Vs Zelensky + another attack on Turkstream and the ever-increasing threat of an SSW.  Up we went again, but gravity didn’t take long to take control and the rest of the day saw us slip sliding back down to a very modest increase on the day.  By Tuesday morning, Zelensky had a gun to his head and Trump tariffs had taken hold.  It was obvious that the entire global picture for equities and commodities was going to have a day in the red, but it certainly surprised me that European gas was gladly leading the charge.  We went down and we went down hard, with the afternoon session proving even softer as the American woke up and smashed the crap out of it.  Maybe it was traders unwinding short US gas Vs long European gas positions in a mad panic as the US bucked the trend and rocketed on the cold weather?

I was largely a fundamental trader when I did the job, but I have enjoyed watching and working with one of my clients who operates with a different trading style this last couple of weeks.  They have been day trading this brilliantly and despite been acutely aware of all the bullish risks, they have sold into the rally’s and done really well out of it.  It has proved there is more than one way to skin a cat, especially when the naughty little kitty doesn’t want to play by the normal rules! 

I would add a note of caution at this juncture, as flipping between trading styles to suit market conditions is an extremely difficult skill and not one I have seen mastered very often.  Sticking to your authentic style and being patient will often prove to be a more prudent approach in the long run.

So what happens next?  Well I remain reasonably confident that fundamental’s will play out in the end and that we have probably come down too hard and fast.  Yes the macro picture looks wobbly at best and who knows what Trump does next, but there is nothing to suggest imminent doom or disaster from the demand side. 

Zelensky is going to sign the agreement, if he hasn’t already, but I have no idea how much of that was factored into yesterdays collapse?  I do know that Trump’s bullying seems to have finally woken Europe up and I don’t see that Russian gas will be featuring highly in Ursula’s steely porcupine plan!

So I think the day of reckoning could be fairly soon, I don’t believe in magic gas and if the SSW brings us and or Asia a late dose of winter than it could be very soon indeed.

I have been wrong before and I will be wrong again, so lets see how this article stands the test of time!!