UNG Update

UNG has been a long term stock of interest, the last update that is fairly comprehensive was from last week, April 23rd. If you are not familiar with the stock and long term trade idea, that's a place to start.

There are many unique characteristics in UNG/Nat. Gas in general and I think the last time I saw something this long, protracted and meaningful was home builders being accumulated during the 2000 Tech bubble sell-off, Wall Street was clearly way ahead of the crowd on those trades that saw long term accumulation of a year or more and incredible moves. Coming right after the "Tech Revolution", who in their right mind would have thought housing was going to lead the next bull market? Wall Street knew and years in advance. I have laid out many of the strange occurrences concerning Nat. Gas, like Bernie's Congressional testimony.

In any case, as a long term trade that probably has a long term secular shift headed its way, Nat Gas / UNG seem to be one of the few stocks out there that seem to be building a huge base.

Here's the update for today as UNG is moving against the FX correlation and the overall market (up in a down market).

 If you look at the last update you'll notice volume is huge lately, you can't see it on this chart as it isn't long enough to show the pick up in volume. The bearish Descending Triangle/Continuation pattern looks to me to be one giant head fake area in which shares of Nat Gas can be accumulated on the cheap, but there have been some recent changes in the trend that are worth keeping a close eye on.


 First the Trend Channel which has held the move below support is now broken-this is the daily chart, so it's a significant break suggesting the down trend since breaking below the triangle is over. The stop area on a long position is around the red box, although I look at this as a long term secular change and it may be worth having  smaller position size and a wider stop to counter volatility/noise.

 In the VERY near term, UNG has run in to a head fake upside move which is acting as resistance, the head fake move is at the green arrow, note the price spike and reversal-again we almost always see some sort of head fake on every timeframe before a reversal in trend, it i that way because the head fake provides momentum to the reversal. So on the 1 min chart we are seeing some profit taking most likely in anticipation of a slight pullback or maybe consolidation.

 The longer term trend on the 5 min chart looks excellent, it is leading positive here. So I doubt there's going to be much more than a pullback or consolidation.

 Here's the move below support on a 30 min chart, as I suspected, it looks like all of the stops/shorts, etc were accumulated as this 30 min positive divergence looks very strong.

The 60 min long term relative divergence is huge, o we may in fact be seeing the start of a move toward the upside in UNG/ Nat Gas that will break out back above where support initially failed. This appears to be a huge stage 1 base, stage 2 mark up would be significant on a base this large.