UNG Update

For newer members, UNG is one of my favorite long term, nearly secular trend assets right now; there are a ton of reasons for this, but we have been following UNG and building positions, moving around a little here and there for over a year now and it hasn't even begun a move to stage 2 "Mark-Up".

Today UNG is up over 4%, but again, this is one we may get an opportunity with. We played some options about a week ago just to juice the return on a good signal and did well, if we can get a little pullback it will make for either a nice entry for a longer term equity position or it may even offer another options trade which I'm inclined to take until we cross above the breakout to stage 2 in which case this is a purely trending long equity trade.

 The daily chart shows the long term base of about a year as an ascending triangle, we had a head fake move or false breakout that we identified at the time in the yellow box, my thought was and still is that UNG was going to be accumulated more before making a move in to stage 2, smart money wants to be in place long before they take it to stage 2, "Mark-up".

 The 4 hour 3C chart (which is a huge sign of underlying flows by mart money) shows the negative divergence that helped us identify the false breakout as that and not as a real breakout, some of us decided to take some off the table with significant gains and enter at a lower area, some chose to just ride it out. At the bottom of the pullback the two white areas are accumulation areas as 3C goes in to a stronger leading positive divergence. However at all 3 key areas, the yellow arrows represent head fake moves that are sen just before a reversal, typically a break of some well known support or resistance level, range, price pattern, new high/low, etc.

 Intraday as 3C was moving up, momentum continued, as 3C stopped, UNG went in to more of a consolidation. I'd prefer to see a pullback in to the gap, price moving up is great for our positions, but a pullback offers some new opportunities.

This is the area I'd watch for a pullback, if we get strong positive divergences in to a pullback, we may be able to pull off a call trade or even just a straight equity long.