UNG

Lots of action in UNG today. The recent question re: UNG is whether it pulls back deeper and gathers some strength to make a run for a breakout to stage to mark-up or whether it pulls back just a bit to do the same-either way it doesn't matter a whole lot to me as I look at it as a long term trade (without leverage as I don't think it will need it once it hits mark up).

Here's UNG so far today...

 The daily chart doesn't show you the volatility going on intraday, but does show you how close UNG is to a stage 2 breakout.

Here's the intraday volatility, and why? As for the downside, today is Thursday and the downside came at 10:30, the same time as the EIA Natural Gas report release...

Released On 7/12/2012 10:30:00 AM For wk7/6, 2012

Prior Actual Weekly Change 39 bcf 33 bcf

The initial disappointment came on an injection of 33 bcf with consensus expecting a smaller injection of 30 bcf.

As to the rest of the bigger picture and the rest of this morning's volatility...

 Longer term on the 60 min chart there's a very nice looking leading positive divergence, however, it's not making new highs here which leaves that question of a pullback still open to those who may be trying to trade around UNG or looking for an entry. I added a UNG long position back in May and have no intention of doing anything but holding it.

 The 30 min chart shows this most recent test of resistance vs the last test of resistance, both saw negative divergences form and a pullback after the first, I suspect the same now, how far, how long? We have to let the market tell us.

 The 15 min chart shows the same negative divergence since testing major resistance. Looking at the two charts above, I'd pretty much expect a larger correction which can be through price (pullback) or through time (consolidation).

 Now starting from the fastest intraday timeframes, the EIA Energy Reports seem to be leaked quite often, yesterday the BLS admitted their MAJOR market moving report is "consistently leaked". Note the negative divergence in to today's highs, there's a theme among the intraday charts that suggests this report too was leaked. Very short term on the 1 min chart there was intraday accumulation at the positive divergence at the lows sending UNG higher, I'm not sure I would read too much in to that as far as the bigger picture/ break out goes.

 The 2 min chart shows the migration of the negative divergence at the intraday highs, again suggesting a leak, the move off the lows was on a positive 2 min divergence as well and is in line with price, actually slightly better.


 The 3 min chart shows that the negative divergence was STRONGER than the following positive divergence and the move up in price fails to confirm on this more important chart.

 The 3 min trend showing the reversal last week and a relative positive divergence, I don't feel strongly that this is enough to move us to a solid stage 2 breakout yet.

 The 5 min chart registers the negative divergence in to the highs, again suggesting it was much stronger than the positive divergence at today's lows, 3C is just about in line with price.

Ultimately the 15 min chart is trying to improve, but it's not in strong position. I personally would not buy UNG as a short term position right now, If I was building a position and viewed UNG as a longer term trade, I would consider buying in this area, but I'd leave rom to add at lower levels.

We'll keep an eye on UNG for any developments that might change the outlook radically, but for now, I think UNG has more work to do before making a move through resistance, I will continue to hold the long position though as I view this as a long term trade.