Saturday, 28 April 2012

I've recently been looking at a couple of different strategies for trading the NASDAQ futures.

Each of them are based on different indicators I've come up with.  The data used was from 3rd January 2012 to 31st March 2012.

The first strategy results (based on a derivative of my PDI indicator);

The second strategy results (using a $ Index based indicator);

The results from the first one here really are not good, average gain per trade is just one point, completely invalidates that indicator.

The results from the second are slightly improved but not by much, suggests there is slightly more merit to the indicator used for that one but again it wouldn't be smart to trade it when you know before you start the average yield per trade is going to be low.

Still, this is the point of backtesting.

I'll need to come up with something completely new and original.

Thursday, 12 April 2012

Reached a decent milestone recently;

I've tagged the 3K mark with my running, that's since December 2008.

Had a look at a couple of charts, the first showing run distances when I started, the second is the most recent chart - showing how I've ratcheted up the distance over time.

Looking to do the same thing with my trading, steady development, build it up over time.
The case for Natural Gas technology stocks.
With excerpts from a WSJ article;

"Natural gas below $2 for first time in a decade

NEW YORK  — The price of natural gas has fallen below $2 per 1,000  cubic feet for the first time in more than a decade, a remarkable  decline for a commodity that not long ago was believed to be in short  supply.
The U.S. supply of natural gas is growing so fast that analysts worry  the country's underground storage facilities could be full by fall and  lead to further price declines.
On Wednesday, the futures price of natural gas fell to $1.984 per  1,000 cubic feet, its lowest level since January 28, 2002, when it hit  $1.91. If the price slides to $1.75, it would be the lowest since March  23, 1999." 

  • With the glut in supply, arguably prices in the low single digits could hang around for an extended period.  Increasing tensionsin the middle east are likely to widen the divergence of cost per MMBtu between Light Sweet Crude and Natural Gas;
  • Ratio of cost per MMBtu for Crude oil to the cost per MMBtu for Natural Gas
  • In other words the cost of a standardised unit of energy, 1 MMBtu (Million British Thermal Units), is currently 9.3427 times more expensive when obtained by purchasing Crude Oil, as opposed to Natural Gas


— 34 percent to generate electric power. (It accounts for a quarter of the nation's electricity.)

— 30 percent by industry to heat boilers or make chemicals, fertilizer and plastics.

— 21 percent to heat homes, cook, dry clothes and heat water.

— 14 percent by office buildings, restaurants and shops.

— 0.1 percent to power trucks, buses and other vehicles.


— Expand the production of plastics, fertilizers and other products that use natural gas as a feedstock.

— Liquefy it and export it to Asia and Europe, where it fetches far higher prices.

— Build natural gas fueling stations to encourage trucking and other  commercial fleets to use compressed natural gas or liquefied natural gas  as fuel.

— Turn it into diesel or ethanol."

  • "0.1 percent to power trucks, buses and other vehicles" looks like an opportunity to me.  That and for some upstart new start to develop new technology that facilitates more efficient compression and intercontinental transportation of natural gas.
  • I would argue that there should be some form of technological arbitrage take place leading to Natural Gas, where applicable, replacing technology in industry and transportation that currently runs using Crude oil.  Because the disparity in cost per MMBtu between Crude Oil and Natural Gas is so large this should narrow over time as more uses for Natural Gas are found and more techologies are developed to exploit them.

Stock ideas;


Fuel Systems Solutions, Inc. (Fuel Systems) designs, manufactures  and supplies alternative fuel components and systems for use in the  transportation and industrial markets. Its components and systems  control the pressure and flow of gaseous alternative fuels, such as  propane and natural gas used in internal combustion engines. The Company  also provides engineering and systems integration services to address  its individual customer requirements for product performance, durability  and physical configuration.

1 year log


Clean Energy Fuels Corp. (Clean Energy) together with its wholly  owned subsidiaries is engaged in the business of selling natural gas  fueling solutions to its customers, primarily in the United States and  Canada. Clean Energy is a provider of natural gas as an alternative fuel  for vehicle fleets. The Company designs, builds, finances and operates  fueling stations and supplies the customers with compressed natural gas  and liquefied natural gas

1 year log


Westport Innovations Inc. (Westport) is a provider of engine and  fuel system technologies utilizing gaseous fuels. The Company's  technology and products enable light- (less than 5.9 liter), medium-  (5.9 to 8.9 liter), heavy-duty (11 to 16 liter) and high-horsepower  (greater than 16 liter) petroleum-based fuel engines to use natural gas.  As of December 31, 2011, the Company sold over 30,000 natural gas and  propane engines to customers in more than 19 countries.

1 year log


Questar Corporation (Questar) is a Rockies-based integrated  natural gas holding company. Questar operates through its wholly owned  subsidiaries: Wexpro Company (Wexpro), Questar Pipeline Company (Questar  Pipeline) and Questar Gas Company (Questar Gas). Wexpro develops and  produces natural gas on behalf of Questar Gas. Questar Pipeline operates  interstate natural gas pipelines and storage facilities in the western  United States and provides other energy services. Questar Gas provides  retail natural gas distribution in Utah, Wyoming and Idaho. During the  year ended December 31, 2011, 89% of Wexpro's revenues were from its  affiliate, Questar Gas

1 year log


Cheniere Energy, Inc. (Cheniere) is an energy company primarily  engaged in liquid natural gas (LNG)-related businesses. The Company  operates in three segments: LNG terminal business, natural gas pipeline  business, and LNG and natural gas marketing business. The Company owns  and operates the Sabine Pass LNG terminal in Louisiana through its 88.8%  ownership interest in Cheniere Energy Partners, L.P. (Cheniere  Partners). Cheniere also owns and operates the Creole Trail Pipeline,  which interconnects the Sabine Pass LNG terminal with natural gas  markets in North America. Approximately one-half of the receiving  capacity at the Sabine Pass LNG terminal is contracted to two  international oil companies.

1 year log

Further reading discussing the "Natural Gas Act", the potential of Natural Gas tech, and the risks;

Natural Gas Vehicles Driven to Outpace Oil


Cheap Natural Gas Heralds an Energy Revolution

(American Thinker)

I have never seen any of these sentiment charts drop to as low as that recently, must have touched 17.5.

from CNBC

"Nat Gas Prices 'Close to a Bottom': Boone Pickens
Natural gas prices, which earlier Wednesday broke below $2, are as low as they'll get, T. Boone Pickens told CNBC.

"I have to think you're close to a bottom," the oil and gas driller and head of BP Capital Management told Street Signs before natural gas settled at $1.984. "You’ve got the rig count going down. That’s what you want to watch."Ten to 15 rigs were closed last week, he said, and more will be closed this week.

"As the rig count goes off it’s gonna cause supply to shorten up. It’ll take a little while for it to happen," he said.

Pickens  has pushed for federal legislation that would put natural gas into  commercial vehicles, so he said he was encouraged after hearing Energy  Secretary Steven Chu speak at a conference Wednesday about putting  natural gas in heavy-duty trucks.

"What  a great time to do it," he said, especially when natural gas prices are  about half the national average of gasoline at the pump."

Natural Gas with COT data - 1 year;

Saturday, 7 April 2012

Natural Gas is $2.093 per MMBtu (1 MMBtu = 1 million British Thermal Units)

Crude oil is 5.6 MMBtu per barrel (from

Crude oil is currently at $103.25 per barrel therefore;

Cost of 1 MMBtu from oil = $18.4375

Cost of 1 MMBtu from Natural Gas = $2.093

Prices are at a ratio of 8.809 : 1  (based on actual energy content)

The ratio of Crude Oil (cost per MMBtu) to Natural Gas (cost per MMBtu);

[Chart using Dow Jones sub-Indexes - DJUBSCL and DJUBNTRG]

Friday, 6 April 2012

Performance of Crude oil futures compared to GDX over 3 years

They were reasonably well correlated for a time.

A look at the Crude Oil - GDX spread (Crude Futures minus GDX) over 3 years;

Could nearing the top of the channel signal an impending low in GDX?

Crude Oil - GDX spread
with GDX

Lows  along the channel were good points to sell GDX, highs were good points  to buy, with the exception of the end of April last year, but that was  an obvious period of excess in the precious metals sector.

GLD and GDX performance over 3 years