UNG Update

I have long suspected something is going on with Natural gas, long before this news of Egypt cutting off the Nat. Gas supply to Israel, which is another interesting macro story we'll have to get in to when there's more time.

Take a look at UNG,

 The volume alone suggests there's some kind of churning going on as UNG has broken multiple levels of support.

 A bearish descending wedge, the break below these two support areas was around the time Bernie was testifying before Congress when a congressional member (during the Superbowl of economic events being watched by everyone in finance) asked Bernie a rhetorical question about Nat. Gas, which was an obvious plug as Bernie has nothing to do with setting energy policy. The question was so out of place it was an obvious plant and if you remember, UNG rallied right after that with a positive divergence the day before-Congressional inside trading!

 Some recent volume in UNG, today it is moving up on the news from Egypt, but either that news was well known some time ago, or as I suspect, something more fundamental is going on with Nat. Gas. I just read an interview over the weekend with a large hedge fund manager, he was moving aggressively in to Nat Gas. All of the stop loss orders being hit would give these hedge funds easy shares on the cheap.

 The 1-day Trend Channel is showing what would be a short term trend change if it closes above the $15.30 level.

 UNG 60 min shows a strong leading positive divergence in to lower prices, remember this is what 3C is supposed to do, contradict price to show what smart money is doing and buying low is what smart money needs to do. The length of the divergence suggests this is about more than just the Egyptian news from yesterday, this divergence stretches back to March and the daily even longer. MArch also happens to be where an obvious support level was broken, stops would be triggered and smart money can easily accumulate without giving away their position as someone has to take the other side of the trade.

 The 30 min has a sharp leading positive right in the area of the 19th/20th, this I do not doubt was inside information on the Egyptian action, those decisions aren't made on a whim.

 The 15 min chart shows the same strong divergence in the same area, I have little doubt this was a leak of the Egyptian news.

The 2 min chart would be more along the lines of Specialists on the NYSE accumulating in expectation of a near term move higher, again, the news was probably well known on Wall Street late last week.

We'll see how UNG reacts to the upcoming EIA report, but long term I suspect there is an accumulation process going on here that is reminiscent of the accumulation of home builders during the 2000 tech meltdown-who would have thought in 2000 housing would lead the next bull market?

Wall Street.

To put it more succinctly, I wouldn't be surprised to hear within a year or so of a major policy change in Energy, the political situation in the MENA area (as I mentioned above, we'll have to address that) is likely a catalyst as everything we predicted about Egypt WHILE Mubarak was still in office, has come true.