LOOK Into The Future(s).

Charts are from 11:20 est.

/NG daily - So, you tell me which gap it is after? The yellow box is the fib retracement for this last climb.

DXY 60m - She's got a spike! I'll get interested when that upper green TL goes down.Remember that gap analysis I spoke of today?

/YG - Mini gold 60m - Is that a H&S forming with a 1111 target? If not the retracement zone is the yellow box and the 38% retracement is 1104.You can see the set up for the breakdown I called, now can it get worse?

EUR/USD daily - Nice channel and riding a support line and at resistance. You see the fib retracement box just under support at 1.38. Other support at 1.43. This is an interesting set up.

EUR/JPY daily - Will the green line hold or will the wedge support be in play?





Nothing happening with the e-minis. Down 1.25.

Minis/SPX Now

UPDATE: DXY cracks upper trendline.  Now can it hold and confirm? E-minis sitting right on support.

E-mini 30m - Lower trendline being tested. It tried, but could not get 'er dun. It is consolidating for some sort of move, and I'm not sure (as a bear) if I smell a rat or not.

SPX 15m - testing lower trendline below and MA resistance above. The lower blue thin trendline held what was a perceived breakdown. See that divergence on CCI? What happened the last time we got one of those on this chart? VIX looks to be at the end of it's rope on this chart.

DXY at support and trending down setting lower highs.Possible a descending triangle?

Conclusion - be patient and wait for the trendlines to crack and get the confirmation. If you are short keep your stops tight. I am still only 50% in SDS and SRS. The daily hist is falling and RSI appears to be rolling over. We need to confirm yesterday's daily dragonfly doji. I believe more downside is expected, but be careful, that may be a descending triangle on the 15m spx. Is the /ES setting up for a pop from here? Volume is absolutely pathetic. The bears may be winning on the scoreboard right now, but they are getting pushed all over the field. I'm cautiously bearish at this time.

UNG update - set new low and I lowered my stops to 8.85.

UNG - Time To Go?

Looking at this 60m chart, I'd say it may be time to take a shot. Price action and position of price and the indicators all favor a go signal here. Keep your stops tight. I'm looking for $11 first - then we'll talk about the 14.41 retracement and the second gap and then the possible IH&S target. The weeklys look to be turning and holding their divergence to price which is bullish. I'm now long a full position in UNG with stops 8.90.

You can see all my UNG charts in my chartbook link in my blogroll. CAUTION - NATGAS did set a bearish engulfing candle following a shooting star. Thus it is possible this pop may be one and done. Keep those stops close.

UNG - Possible Double Bottom (Or Worse)?

Folks, UNG is just getting abused again and is approaching the double bottom (possible dead cat bounce) that few saw coming. I did not see it, but I was warning about the position of the weekly indicators and how I doubted further strength. I am not covering futures, contango, supply, demand (or lack of demand), the weather or any EIA reports that can be found HERE. You need to look into all of that stuff before investing. Lets dig into the charts and see what we can find. I can promise you this, the charts appear to be broken.

NATGAS v. OIL Comparison monthly - First a quick look at the decoupling in the price of NATGAS to OIL. Quite clear in the chart. Although NG has made up some ground, Oil is acting like a scorned woman running the other way as fast as possible. Notice the role reversal where NG used to run away from Oil. NG has broken back into it's historical channel. The candle last month with the long upper shadow was bearish and the bears are controlling the ball this month as well. The indicators on this chart are mixed with RSI, CCI, ROC and TRIX going to the red team, and  RSI and MACD going to the green team. It is possible that this is an ABC corrective and we're entering B down which might retrace 38% to 4.65 (which it has done) or to 50% at 4.26 or 61.8% at 3.88. Will it be able to stay in the channel?

UNG 30m Chart -  This is where things get a little screwy. Just follow the two blue and one red vertical lines on the chart and you tell me if this is broken or not? Under $11.00 I do not understand any price action. No indicators are responding in any sensible form at this time. Sure a nice fat divergence to price is being set by RSI and the others, but come on. It is like price and the indicators decoupled. I have seen this on charts before but rarely. Only two possibilities, big upside or more drastic downside.

UNG 60m chart - OK, let's try the blue/red line trick again on a longer time frame. BUSTED again. The divergence in RSI is pretty impressive and would indicate a possible booster rocket is under UNG when/if it gets to the double bottom. What bothers me is what happened in the pink box at the last bottom. CCI took a strange turn for the worst after giving some reliable bottoming signals. If that happens here (see NATGAS chart above) the low for NATGAS around $2.25 might get tested and UNG continues to get hammered. If not and the divergence holds, UNG could pop right back up to the 12.10 area.

 UNG Daily chart -  OK, it gets more interesting here in the daily chart. The S Sto is the most reliable trading indicator here (although it is getting stomped right now like a bug). The divergence in CMF is impressive and if a divergence should show in RSI, the UNG bugs will be happy little critters. CCI appears to be dead, but it is approaching a lower pink bear market floor line that has produced bounces in the past. Volume decline here is very apparent. NOW, I'll point you to the possible H&S pattern that has a possible right shoulder forming with a target somewhere near $16.

UNG Weekly chart - OK, notice RSI in this chart appears to be turning at the lower red trendline (blue arrows). Volume decline is very apparent and decidedly red. S Sto has been a reliable indicator here as well and it does not look like it has any intentions of turning soon. It could whipsaw, but looks like more downside to come. The other thing here is the LT downtrend trendline (thin black) is just under price. Is this going for some sort of proper backtest of that trendline?





My call: It is quite apparent someone wants NG dead and they are doing a good job at killing it. Betting against or on something that is determined by a contango forward pricing action is nuts, so not matter what you do KEEP YOUR STOPS TIGHT. I'm guessing upside yet, but possibly soon. Starting at the double bottom you need to have your orders on the launching pad. IF the daily S Sto breaks up out of the embedded mess it is in, that will be a clue as well. On the weekly chart 5 red weeks in a row has not happened, 3 and 4 are common, but not 5 (we're in the 5th week now). Also on the weekly chart the turns in the two RSI's has my interest up a little. The divergence on the 60m RSI is important and possibly (usually, but maybe not in this case) a good tell a turn is coming. Other items in the charts look good as well, but there are also some discouraging items. If the H&S on the daily chart plays out that would be a great thing. We'll have to see. So, be patient. Let the play come to you. One last thing, you may have to make this bullish play in the face of P3 coming down. I also mentioned the lower low on the NATGAS chart around $2.25 and the possible B corrective of NATGAS above, so be careful, busted charts of manipulated commodities can be tough to get right (LOL).

I just thought I would trow this out there - from my November 4th UNG post - "So, the 60m chart says go. The daily chart says it could go, but most likely will not for a while. The weekly chart says if it does go it won't go anywhere and it should not be going anywhere anytime soon anyway. The monthly chart (the first natgas chart above) actually looks good except for that hook in RSI. This is possibly a nice big dead cat bounce and might just set a double bottom, but that is still to be seen."

Remember because certain assholes exist on the web, I have had to turn on comment moderation, so please be patient in waiting for me to reply. I'm working on getting Disqus set up which I believe everyone will appreciate.

GL trading.

UNG- So What Gives?

I'm not going to delve into a lot of the factual evidence that natgas is over abundant, over supplied and over sucked out of the ground, nor that demand is down and the need is not there, not the fact that they are shutting down extraction facilities. That should be enough evidence right there that natgas even off of the ridiculous highs of 2007 still may not be priced right. I'm also not going into the contango and forward pricing issues. You'll need to do your own homework there.

You know me, Mr. Manipulation Guy, I think the price of gas and oil are controlled by the futures traders that have no interest in anything but price appreciation. I believe if the market were regulated and only those with a direct interest in the game should be able to buy and sell futures, but of course this would drive price to a natural level and at those levels, companies would surely go bankrupt or struggle to survive IMHO.

$Natgas and $WTIC (Oil) - The price spread between oil and natgas is still well beyond historical norms. Although natgas has done it's part to correct the disparity, I still think oil will need to do most of the work coming down. Notice that natgas has moved back into it's historical channel and that the indicators on this monthly chart are bullish to flat coming off of the lows. The turn in RSI bothers me somewhat.



UNG 60m - This is the most bullish thing I could find regarding the indicators. The divergence in RSI, the embedded S Sto, the completed retracement, nearing the gap fill all got me excited, till I got to the daily chart.



UNG daily chart - Nothing to see here, move along. RSI may be slowing down, but it is not close to bottoming out. It is below 50. The bonus is S Sto is embedding which allows for the possibility of a turn at anytime. This chart is nearing a turn point, but it is not there yet. Volume continues to go away.



UNG weekly chart - This chart confirms the bull move is dead. See the pink trendline on RSI and the red arrows. It continues to beat it's head on that ceiling. Nothing else here in the indicators looks good at all.



So, the 60m chart says go. The daily chart says it could go, but most likely will not for a while. The weekly chart says if it does go it won't go anywhere and it should not be going anywhere anytime soon anyway. The monthly chart (the first natgas chart above) actually looks good except for that hook in RSI. This is possibly a nice big dead cat bounce and might just set a double bottom, but that is still to be seen. If I had to count it (it used to be on the daily chart), I had this as a 5 or a B wave.

9.54 will close the gap.

All of this could be changed in an instant if forward pricing and contango gets out of whack. When that happens, you'll know and you should jump on for the ride. I'm anticipating at least a double bottom or something near there. Any worse and I'd be surprised (not really). Watch the weekly MACD HIST as well. That may be a good signal if it can begin a rise. If that trendline on the weekly gives a major move may be in order, but no danger of that now.

GL trading.

UNG - The Pent Up MEGA Post

Confusion reigns down on the Nat Gas sector. Buy, sell, stay away, you'll make a fortune, buy the producers, buy the commodity, the bottom is in, supply is down, demand is going to grow, Nat gas is going to $2; what the hell? Below are a few posts that I liked from around the web. (Notice the prominent words Volatile and Speculative)

Forbes - 9/21 - Natural Gas Still Too Volatile. "Natural gas prices have recently become lighter than air, as the commodity finally gets some love after a year-long slide. Yet even though it has gained traction, our team of investment advisors is cautious about the fuel, unconvinced demand is set to take off." There you have a more definitive call.

Greenfaucet.com - 9/21 - Speculating on Natural Gas. After moving from $2.50 to $3.77 per BTU last week the pressure is back on the price of natural gas. The rally is based on speculation that prices will continue to rise as inventories fall. Therein lies the issue. Supply has dropped the last two weeks, but not enough to push prices significantly higher. If I were an investor (oh yea, I am) I would take my profit off the table and see how this plays out. The instability in the natural gas contracts has been evident as the downside pressure has controlled the trend. Sounds just like the same thing I have been saying. I like the folks at Greenfaucet and suggest you take a peek at their site while you are there.

Seeking Alpha - ETF Stats for UNG Gives a nice list of SA authors that cover Nat Gas and is worth bookmarking for when you need some good posts on the subject.

BOTTOM LINE is you need to check out EIA's Natural Gas Weekly Update (I added a link in my blogroll). They have the definitive release on Nat Gas pricing and information. You get it from the horses mouth (not the other way around). Very detailed information from the government on the pricing of Nat Gas and the economies surrounding pricing. I'd highly recommend you visit this site for an update before you invest.

EIA provides a monthly Short-Term Energy Outlook. The next update is October 6th. Did you know this, "Despite low relative prices for much of the year, industrial natural gas consumption declined by 12 percent in the first 6 months of 2009 compared with the same period last year. EIA expects this year-over-year consumption decline will continue through the second half of the year for industrial users, although the trend will be less pronounced." How about this, "EIA expects natural gas consumption will increase slightly in the commercial and industrial sectors in 2010 as a result of improved economic conditions and low prices. Consumption remains relatively flat in the residential and electric power sectors next year. The anticipated addition of new coal-fired generating capacity and rising natural gas prices limits the potential for significant increases beyond the forecast 2009 level in natural gas consumption by electric generators."

In other words, don't be looking for some massive recovery in the price of Nat Gas this year or next. This report can give you some reliable information regarding the outlook for crude, nat gas and coal. I will be making it a must read and will notify you of its release here.

I have no hope for any significant rise in UNG till the over supply under demand issue straightens its self out. Sure, as futures roll thru there may be sentimental pops, but the EAI reports say no demand for a year or two until the economy recovers. I expect a long drawn out bottom at these levels for some time.

Given that UNG is still trading at a significant premium to NAV ( Sept 21 - 10.57 NAV and UNG close 11.25, 6.43% which is narrowing) since the supply demand issue is not (nor will it be for some time) worked out, and the general (and expected to be worsening) economic conditions, I fully expect the lows to be tested again.

OK, that all being said let's look at a chart and apply some TA to the situation. 30 and 60m indicators are falling. The daily indicators are topping out. Weekly indicators are mixed. The run off of the capitualive bottom has reached the retracement zone above the 50% fib retracement line. UNG left several gaps on the way up. Price has broken the uptrend line. UNG is forming a possible bull flag at this time. As for the form of the climb, I do not like an ABC. I prefer a 1,2 or a 5 wave count. If a 1,2 I expect a pullback to the 10.45 to 10.10 range. If this is a 5 wave move and 5=1 and gap support holds here the target range should be near 13.18.

30m UNG chart (may be better viewed here and other UNG charts also)



Nat Gas - Oil Spread chart - (Better viewed here). Nat Gas drove up to test it's LT lower trendline and put a spike thru it. Oil is leveling out. Please visit the older Zero Hedge link in the chart for more information of the spread of NG to OIL. This will correct, I believe oil will do most of the correcting downwards. I believe this monthly chart of Nat Gas shows the bottom is in (or should I say it won't get any worse than it already has).



GL trading.

UNG Time (About Time)!

UPDATE: New UNG chart at 3:15.

NOTE: As I did this post I had to move the fibs DOWN three times to keep up with the fall. Amazing.

First let's visit the United States Natural Gas Fund Site HERE. This is where you need to read to understand this investment if you have not read about it. There you can find the NAV of UNG as of the close yesterday $8.70 and price closed at 10.27. That would be a 15.29% premium to NAV. That has to correct. That will keep downward pressure on the price. I'm not gonna rehash the rest of the story.

First chart is UNG and Oil. The historical price relationship should be restored eventually. How this happens is any one's guess. Right now I'm thinking Oil will be doing most of the work.



The next chart is a new 30m chart I threw together today realizing we all needed a little better drill down than I was providing. All I can say is that UNG appears to be oversold based on all indicators and has been for some time. The move over the past three days looks capitulative to me. Too steep and totally parabolic right now. The problem is I am not about to recommend a buy. I just can't. If you should trade it, please, 10,000x please use stops and have a strategy.

It will correct at some time in the future and that will be a good winner, but if you have been averaging in all the way down you are in deep shit. I started buying at 23 and got out at 19. Have not touched it since. Don't plan on trying to catch this falling knife. You bottom fishers waiting, I have one question - Do you feel lucky? Well, do ya PUNK?

UNG Time

Many emails asking for a UNG update, so here it is. I'm looking for continued weakness thru the end of the year, then the trendlines on the indicators run out of room to fall as well as the falling wedge will play out. Even then I am not expecting a big pop then as continued weakness in overall economic conditions persist. It may just form some sort of range bound bottom I'm guessing and this may just be the beginning. The major downtrend line is busted, but the reaction to that was to form a falling wedge. Thus, IMO the bottom is being set, but will remain in place fro a long time.

The divergences on the 60m say a pop will possibly be coming soon. The gap around 12.20 may provide support or be a target price is after. The daily appears near a bottom and the weeklys are coming up on trendline support. The lower BB and trendline jive really well around 11.74. Don't just look at the 60m chart and call it good. To get in tune with price movement, you need to look at the daily and weekly indicators as well.

Trading UNG for 10 to 20% pops is a good thing, but looking for it to kick some serious butt and make a major move is insane. The fundamentals are not there. Remember a few UNG posts back I spoke of contango and the forward price? This is the true key to trading this. If you have knowledge that the forward prices are higher, it will go up. If not, then the slide continues as the contango evaporates. That being said, as long as production is being cut and demand continues to fall, don't be looking for any miracles here.

I expect new lows to be set before this is all over. Links to the daily and weekly charts are below. GL trading.

60m UNG viewed better here.




Daily UNG viewed better here.

Weekly UNG viewed better here.

UNG - Who Lit Their Gas?

KaBoom! Freaking blew a gap in the price you can drive a truck thru.

60m - You can see the falling wedge the best here. The breakout looks great on all the charts. The 60m is almost spent but should embed given the DAILY and WEEKLY indicators. RSI is popping trendlines which I like to see for a real trend change. The break of the LT down blue trendline (seen in the Daily and weekly charts) and close above it may be for real this time. the concerns are the upper wedge line and the two retracement areas around 14.65 and then the BD line (lower trendline) from the triangle backtest.

UNG Time!

Three charts; 60m, Daily and Weekly with articles and commentary from yours truly.

The links to each chart are above in the time frames.

Let's start with the additional share issue from Seeking Alpha today - Natural Gas ETF Awaits New Shares as Prices Fall. If you just think UNG is a normal ETF, you need to read this. "The $4.6 billion fund made 300 million new shares available May 6, which grew to 347.4 million shares, and ran out on July 7. The Securities and Exchange Commission is deciding whether to approve 1 billion extra shares." That is ONE Billion extra shares with a B.

What are some of the issues facing UNG and natural gas. From the same article, "Stockpiles of the fuel increased 90 billion cubic feet in the week ending on July 10, hitting 2,889 trillion cubic feet, a 15 year high. Demand by factories, steel mills and chemical plants, which make up 29% of U.S. demand, dropped 13% in 2009’s first 4 months year-over-year."

Further issues are discussed in Econbrowser's article Natural gas and oil prices. "Natural gas prices have been pummeled by over-supply and weak demand, cutting the national drill rig count in half in the past year. Meanwhile, monstrous initial production rates in non-traditional shale plays have added to price pressure, as producers fight to hold the terms of their expensive leases in boomtowns....Now, British Columbia's Horn River Basin might be added to the list, with the help of behemoth ExxonMobil (XOM) reportedly coming up with initial rates on early test wells to the tune of 16- to 18-million cubic feet a day.... That is double the rate of a really good well and in line with the Haynesville, in Louisiana, which may hold some 250 trillion cubic feet of recoverable national gas, enough to satisfy domestic demand for a decade."

Want to know what drives the price action in UNG? Contango! "Rolling hurts performance when the current contract is worth less than the next month, known as contango. The natural gas market has been in contango 94 percent of the time since the fund started in April 2007, compared with 78 percent since April 1990. Contango doesn’t matter as much when prices rise. Gas cost $7.50 when the fund debuted and increased 81 percent to a 2 1/2- year peak of $13.58 on July 3, 2008. The fund gained 25 percent during that time, besting the Standard & Poor’s 500 Index, which fell 14 percent."

Bloomberg has Natural Gas ETF Down More Than Fuel as Fund Sells Out (Update2) where you learn, "“The amount of interest in this fund is a surprise given the trend in gas is down and not looking to change any time soon,” said Tom Orr, the director of research for Weeden & Co. LP, a Greenwich, Connecticut, securities brokerage, in a telephone interview. He predicted natural gas, this year’s worst performing major commodity, will fall below $3 per million British thermal units next month, from $3.689 today, and rise to $4 in the fourth quarter."

I did not discuss the relationship between the price of oil and nat gas (it is covered in detail in the Econobrowser article). You should read it. Bottom line is the relationship ratio is not at historical norms that will require the prices to become closer in relation to each other. Given my Oil Up Or Down post below, I believe the price of oil falling will take care of the majority of this correction much more than nat gas rising.

So all of you who think UNG is a bargain and do not understand what is happening behind the ETF should be pretty surprised right now. The price is in contango now. This means there is no fundamental reason for the ETF to be rising other than speculation. There is no demand. Rigs are shut down. There is a serious supply glut. Shall I continue? Why is there demand for a Billion new shares? I can't tell you. Maybe it has something to do with Cap and Trade and the fact that nat gas is more environmentally friendly and cheaper than oil.

Lets get to the chart - I chose the 60m because it gives the best near term picture of what is going on. There was a nice triangle that has developed into a falling wedge. I do believe this is part of the bottoming process. I am going to stick with my thoughts that UNG is forming an MA pattern as mentioned before in previous UNG posts. The rising wedge in red should generate a bull flag and alter the shape of the rist to another wedge that will lead to the end of the rise.

I had previously (now deleted) had the triangle breaking down to 9.50 (width of the trianle from the breakdown point). I am not ruling out the possibility of a backtest of the triangle BD line and then a move lower. I missed the small H&S formation at the bottom and was way to bearish on UNG. The indicators turned on me unexpectedly and I missed it. This is why I am laying out all the scenarios I can see.

The annotations are in the chart. Based on the indicators I expect near term trend to continue. The 60m indicators are topping out and setting nice negative divergences. They will embed as the dailys are still in bull mode. The weeklys look strong as well. Actually UNG is set up a lot like SPX had been about a week ago. Look for the dailys to top out and set nice divergences on the weeklys for the nexy fall to what I think will be a lower low.

If UNG takes out the upper wedge line I would be surprised given the fibs, triangle apex, resistance and trendlines. Then again, greed and speculation might allow it to grow to a double top near 16.25, but I do not see it. I do expect another touch of the lower blue trendline for a possible ultimate bottom, but given my beliefs in the prospect for a continued depression (is is no longer a recession IMO) then demand for nat gas should remain low and supplies high. Not a great environment for growth. Oh, and I would think hard about dilution if a Billion additional shares are released, that might effect price just a little bit.

I hope this helps. GL trading.

We Better Turn Soon - Or Else Something Is Really Wrong

NO! I am not showing that it is OVER, but to those that have been comparing "this bottom to that bottom" blah, blah, blah sure looks like you can make a great case that the bottom is in looking at the monthly chart.

Point of this is with the dailys and 60m topping out and the weeklys beginning to roll over, then the trendlines on the monthly indicators just may hold. It is gonna take some serious whipsaws in some of these indicators to make the turn in time. The VIX falling wedge ending pattern would confirm the turnaround suspicions as well.

(Disclosure - GS and the manipulators will take the market wherever they want to and TA nor EWT nor fundamentals works anymore so all this might not mean jack. Also - my target for "option 1" call looks like total crap on this chart. Not giving up on it yet. Note GS came out with a target of 1060 today for SPX - Uh, Shanky has been at 1050 for quite some time now as his target. First MW copying my shit and now GS? This is a great compliment and to have "THE" market manipulator agree with my target is quite the compliment - especially when I was over a month ahead of their call.)

For those asking for a UNG update, I have updated charts, but have not come to any definitive conclusions. I did find this interesting article on nat gas and oil prices. I'll post on UNG soon.

Still digesting comments on the new look. I'm not all that stoked about it either. Might change again soon. I mainly want something wider than the old format. If anyone would like to send me a suggestion it would be appreciated - email in top right.

Still struggling with SC support to get the new computer to allow me to annotate charts, so my time to update charts has become severely limited. I'm not happy. Sorry.

Thanks for the views and comments. GL trading!

Chart Link For better Viewing


Chart Link For better Viewing