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.