UNG Update

I was hoping to get this out before the 10:30 EIA Nat. Gas Inventories which just came out at a 78 bcf build vs prior of 82 bcf. At present, this puts our UGAZ long at a +9.5% gain.

The main idea of this post is despite the sharp recent pullback, probabilities are still very much on the side of higher prices regardless of what today's EIA print would be.

 Before the recent 60 min positive divegrence, the strongest signal which was very strong, but is somewhat dwarfed by the new positive divergence, was the negative to the left in red which we saw as a very high probability decline until a reversal process (rounding bottom) and stronger leading positive divergence formed which is still the highest near term probability resolution so I haven't been too concerned about the UGAZ long.

 The simple trend of the 10 min 3C chart shows where a probable pullback was developing which is fine, nothing shoots straight up and as always, Wall St. is never going to make anything easy, thus it's easier to rely on objective data and probabilities rather than fear instigated by sharp declines.

Just looking at this most recent reversal process starting, my gut would say it needs to be a little wider (price pullback toward recent lows before heading higher), however with such a strong 60 min chart I'd say the probabilities of this chart resolving to the upside are high.

 This 5 min chart just points out where I closed a small UNG call on 8/6 as it expired on 8/8 and there were already some negative signs so I took it off then, but left the UGAZ long and other than a half hour or so the next morning, I didn't leave much on the table.

The reversal of this pullback will start showing positive divegrences on the earliest timeframes, 1, 2,3 min etc. and migrate out to longer ones, thus far that's what we are seeing on this 1 min above as well as...

This 2 min chart and

This 3 min chart.

Just as I was capturing these the EIA NG inventories printed sending UNG/UGAZ higher...

 Today's intraday price and EIA print reaction. However I would not be surprised or alarmed if it came back down to widen out this reversal process, in fact I'd prefer that it did have a stronger toe-hold to make its way higher.

This chart should give you some idea of what the trading character of UNG is and what a reversal process' proportionality should look like, just slightly wider than it is now.

All in all, I'm not concerned about the UGAZ long and expect the 60 min leading positive will lead UNG/UGAZ higher in the days and weeks to come.