Wednesday, May 19, 2010

United States Natural Gas Fund (UNG) - Bullish Divergence


UNG which is the ETF for Natural Gas has put in a bullish divergence on the daily time-frame. In the lower panel is the MACD indicator which clearly is showing that momentum is shifting to the upside. Natural Gas has been trending lower for quite sometime but it does appear that this market may be close to making a bottom.

Here's how I will play United States Natural Gas Fund (UNG). As you can see, this ETF has been selling off for the past two days, but rather than just buy into the weakness, I'd like to see some buying come into this market within the next few days. If I do see this take place, I will be all over this ETF with a protective stop right below 6.60. Let's see what happens.

5 comments:

DG said...

UNG, like many commodity ETF's, has been a disaster as more than a trading buy. The rolling forward of the underlying futures contracts has had them drastically underperform the commodities they are supposed to be tracking. Any comment on this vis-a-vis your possible recommendation? Thanks. Great blog, by the way.

DG

Kevin said...

I agree with you about the rolling forward, it really does affect UNG's performance. I still think if natgas futures continue to rally, UNG will move higher also making the reward to risk ratio favorable. It;s a low risk trade right here.

David said...

Is there an email address where I can contact the blogger, Kevin?

Kevin said...

KevinsMarketBlog@aim.com

Anonymous said...

Like I said before, I'm bullish on energy (rock bottom energy sentiments), so I will follow you on this one. I placed a limit buy circa $7 (via options that appear to have little premium on UNG). I may to bid higher if there is buying vs selling today.
Jack

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