May natural gas has run pretty much unabated from lows at 326 in mid February up to 405 yesterday and 403 this morning. We are very overbought with Stochastics readings near 93%. The forecast is moderating throughout the Midwest beginning later next week and we are exiting the primary heating season. I look for a minimum correction to 384 and more likely 372. The margin for a full size contract is $2200 and just $550 for a mini contract. Each cent (399 to 398 ) equals a $100 for the full contract and $25 for the mini. If we sell here at 399 the risk to the stop at 406 is $700 for the full size natural gas and $175 for each mini contract.
The Trade: Sell May Natural gas at 399 or better or sell mini Natural gas at 399 or better
Protection: Place a buy stop at 406 – Risk is $700 for full size and $175 for mini
Objective: Place an order to liquidate at 372 $2700 potential for full and $675 for mini
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