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Naysayers, mark your retreat now. That’s right. It had to be said and I’ve been saying it since Tuesday. The bottom is in. You can bet on it. We have the Dubai bid and the Fed bid in keeping the market above key support levels that were scaring away the speculative money. Now there’s a huge short interest building in the Yen and the Fed rate cut of at least 0.25 is in the cards.

Double bottom…

This is critical. A key downtrend reversal through the double bottom you see on the chart above means we’re very likely out of the woods.

Watching and waiting…

Data is king and we’ll be getting a lot of numbers before the December 11th meeting. Of those numbers the most important is the jobs report coming out on Friday December 7th. Wall Street expects less than 100,000 jobs added. I expect even less than that. The lower the number the more likely the Fed steps in.

Trading this market…

You have to understand that speculating is risky to trade this market. Appreciate that most of the downside risk has been taken out and we’re going to more than likely see a great rally to the end of the year. Historically this is a very positive time of year for the stock market.

What should you be trading? I like Nintendo, Amazon, Target, Garmin, nVidia and GameStop. I’ve been buying them all on these downward swings.

Sleeping at night…

Like any rational person, you probably worry about your investments! Not to worry. Consider hedging with puts or selling some of your shares on rallies. Buy shares back on weak days and offload your puts. You’ve just learned how to maintain portfolio insurance!

Good luck trading!

Natural gas traders sold off the December 2007 futures today by nearly 2% on inventory data that showed a draw of 9 billion cubic feet, within the expected range, but nonetheless disappointing traders who were hoping for a larger draw. This was the first draw of this winter season, and even though natural gas is at record storage levels, we also have had the coldest start to November in four years.

As these natural gas traders hyper-focus on last week’s inventory data, many major weather forecasting institutions have predicted a cold snap hitting the East and colder air hitting the Mid-West, the nation’s largest residential natural gas consumers, this week. I believe floor traders have oversold Natural Gas on today’s inventory data. They tend to myopically focus on what was, not what is. The data we got today was backward looking and is of no use when attempting to forecast the future draw. The best indication there is the weather and I’ll tell you as a natural gas heat user, I’m keeping the furnace on because it’s COLD!

In summary, the cold snap that traders are hoping for may well be on the way.

http://www.weather.com/newscenter/fcstsummary.html?from=wxcenter_news

http://www.accuweather.com/news-story.asp?partner=google&traveler=0&article=0

http://www.cpc.noaa.gov/  (see 6-10 day and 8-14 day temp outlook).

Peter Linder, an energy analyst and senior adviser with Calgary-based DeltaOne Energy Fund, expects any price decline to be short-lived. Buyers may return if gas falls below $7.70 per million British thermal units as they examine the prospect for colder weather later this month and into early December.

Be ready for a surge in natural gas prices as speculators enter natural gas during what is shaping up to be an usually cold week in November.

Should this trend continue, natural gas may start to catch up with the momentum crude oil experienced as traders shift out of that expensive trade and in to the more fairly valued natural gas plays. For more information on natural gas, see the Moo Natural Gas Center.