UNG Update

UNG, Natural Gas has been a Long Time favorite here as a long term trade (long), this is not a trading or swing trading position, this is a secular trend trade.

Here's the update on recent action in UNG and if you closed out some of the position on the last warning of a downside move, you may want to consider adding those shares back in the area.

 You are seeing about half of the long term base on a daily chart. The yellow area is a confirmed head fake breakout and I suspected because the apex of the triangle is so narrow, we'd see a fast move (failed moves produce fast moves) to the downside for a Crazy Ivan shakeout, essentially there were two shakeouts to remove ALL weak hands, I'd expect this before a real breakout to stage 2 Mark up.

In white there's a daily candle Hammer on higher volume, a decent reversal signal and we are looking for UNG to move up like the green arrow above the base pattern.

I have answered a lot of emails about UNG this week and my gut feeling (since we could see this move up in the market in advance) is that smart money moved allocations out of lower yielding or lower Beta assets and put it in to higher yielding/Beta assets for this move. There was a short term negative divergence in UNG in to last Friday, that's when the market dropped and all high yield assets ignored the market and held up, it's also when UNG dropped. I suspect that was the switch off. If I'm right, I'd expect to see 3C signals show money coming back in to UNG as the trend 1 pop in the market starts to come to an end and sure enough, yesterday and today we are seeing that.

 5 min chart, negative in to last Friday on a head fake move, now a positive divergence as money seemingly is coming back in to relatively safer assets.

The 15 min chart is flying positive.

And overall, the long term is still leading positive.

I haven't changed any positioning since first entering the position and I don't expect I will, for me it's long term and needs to b managed that way, that starts with the stop/risk management, it needs to be wide enough to accommodate a long term trend.