UNG Follow Up

As many of you who have been around a while, we spotted something changing in UNG many months ago, many of you have been long UNG and it is probably my favorite long for a longer term trade or a secular bull even in an ugly overall market environment. I opened a UNG long position in the equities model portfolio several weeks ago which is in the green.

While there's a long back story to UNG, the change of character, the basing and a lot of analysis on this stock, here's just a brief recap of where we stand with UNG as well as today's intraday charts.

 This is an area in which I suspected UNG was accumulating and forming a base. Last Thursday's EIA Natural Gas report showed there was not as large of a build as was expected, but after watching many EIA reports in both Nat Gas and Petroleum, I can't recall one that moved the asset nearly 15% in a day.

 The daily chart seems to confirm accumulation at the April - present period.

 On the 30 min chart, the negative divergence around May 23rd that pulled UNG back, was really not very impressive as far as divergences go, the more impressive divergence was the positive divergence leading to and just before Thursday's Nat Gas report, something definitely looks like smart money was purposefully active.

 As for today's intraday 1 min chart there was accumulation late Friday on a small pullback (note how flat price was in the area-a tell-tale sign ), since that positive divergence Friday UNG has responded favorably today and is in line (price / 3C trend confirmation).

 The 15 min chart gives more detail re: the pullback from the May 23rd-ish area, shows confirmation on the pullback briefly and 3C then going leading positive right in to last Thursday's report. Overall, the negative divergence that caused the pullback does not look like it was anything serious or meant to do anything more than bring price down to be accumulated at a better average entry.

 To hold the majority of UNG's downtrend over nearly 3 years, I'm using a 5 day Trend Channel setting, there was only 1 stop out in this entire downtrend at the red arrow.

Currently there was a stop out of the downtrend at the green arrow, on the pullback there was just barely a stop out on the long position and currently the long term trend stop is at $15.45. I like UNG as a longer term trend play and will probably approach the position in that manner, however if you need a tighter stop for a swing trade, intraday trade, etc, just email me.

All in all, it UNG has moved from Stage 4 (Decline, to Stage 1 (Base) and looks to be working on Stage 2 (Mark-up) and that's where the trending/easy money is made. A break of the $20 area should set UNG in to Mark Up mode.