UNG and the Weekly EIA Natural Gas Report

This report is usually due out at 10:30 on Thursday but because of the 4th of July it was moved back to today.

Released On 7/6/2012 10:30:00 AM For wk6/29, 2012

Prior Actual Weekly Change 57 bcf 39 bcf

Expectations were for a 40 bcf injection, so the actual fell a little short; this is bullish for Nat. Gas, but considering UNG is at a major resistance level that once broken, should send UNG in to stage 2 mark up (a nice trending trade), I doubt it's enough to get the job done.

 UNG moving from stage 4 (decline) to stage 1 (base) and very close to stage 2 (Mark up).

 This morning's action on the release of the EIA nat gas report, an initial spike with heavy volume and a long candlestick upper wick suggests there was a churning or distribution event at the intraday highs, since UNG has broken back below the major resistance level that separates the base from stage 2 mark up. This has been a question over the last week, whether UNG would just pullback a little and gather steam to breakout or whether there would be a deeper pullback and gather more steam for an eventual break out to stage 2; as of this a.m. it seems the question has been answered and I'd expect a deeper pullback which will open up some opportunities for those interested in the trade to let the trade come to you and buy on price weakness. UNG remains one of my favorite long term long plays.

For those with a profitable position already, you may want to consider whether you want to take profits and re-enter at better prices, I believe I have about a 14% profit in UNG, I intend to hold UNG and look at maybe adding some if it pulls back enough with solid positive divergences in to the pullback.

 The 2 min chart shows the distribution this morning at the churning event mentioned above.

 The charts between 3 and 15 min are all pretty much in line with a pullback, despite some better readings earlier in the week. This 15 minute chart suggests we will likely see the pullback I initially thought we'd see.

The 60 min trend channel may be useful for those looking to take a profit and re-enter at lower prices, the current stop is at $18.40, although I'd probably consider just taking profits here if I were inclined to trade around the position. I'd expect the pullback to end up near the support level of the base that UNG has been building, around $16+.