Tag Archive for: UNG
Natural Gas — A massive H&S bottom?
/by Peter BrandtNatural Gas Rising
/by Peter BrandtNatural Gas Rising
The dominant chart construction in Natural Gas is the completed 7- month H&S bottom on the daily graph (Oct contract). Note the appearance of a possible 6-day flag on the Oct chart. Factor is long Natural Gas and members were alerted of this buy with our premium reports section.
The chart of the soon-to-be nearby Aug graph displays a pennant, not a flag (see below). The difference is that a flag is a diagonal correction while a pennant is a horizontal correction. A pennant is more constructive than a flag. That the nearby Aug Natural Gas contract displays a pennant while the Oct contract displays a flag is a constructive indication – in my opinion, for whatever that is worth.
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Trading futures- and forex-related ETFs is for fools
/by Peter BrandtCharts I am watching, week of July 22, 2012
/by Peter BrandtGAZ — an ETF that is full of hot air
/by Peter BrandtBottom to Natural Gas at long last
/by Peter BrandtOwning UNG is a losers game
/by Peter BrandtCharts I am looking at for the week of July 18, 2011
/by Peter BrandtDue to a death in the family, this may be my only post of the week.
Following are the charts that have my interest coming into a new week.
$AUDCAD — This forex pair completed a rounding top last week. I am short, but not as short as I would like to be. I will have orders in place to extend my leverage if the market can retest the top.
Silver: $SI_F, $SLV — The rally late last week completed a possible symmetrical triangle bottom. The bulls appear to be back in control in Silver. I do not have a position in Silver futures, but am long $SLV with a stop below last Wednesday’s low.
Was my forecast for $20 Silver wrong? Right now that is the way it seems. Trading is a marathon, not a sprint. I have some very bad news for all the Silver bulls who are such fond fans of my blog — I was NOT short last week. Sad, but true! I will let you know when I go short. By the way, I always trade with a stop and seldom risk more than 100 basis points per trading event (one percent of capital).
There is another intrepretation of the Silver chart that is not as immediately bullish. I have a great dislike for chart patterns with diagonal boundaries. The symmetrical triangle is my worst enemy. I much prefer a horizontal chart boundary. Silver has not yet completed a bottom if we use horizontal boundaries to define the trading range over the past 10-weeks, as seen below.
Gold: $GC_F, $GLD — The Gold market completed a text-book continuation symmetrical triangle this past week. I am long Gold futures and Gold ETFs. Gold, unlike Silver, may one day be monetized.
Cotton: $CT_F — I feel like an idiot. I shorted Cotton really well based on the H&S top. I felt like a genius when I covered on Friday, only to have the market go limit down. I really thought the market would cover the opening gap. I got cute — and I doubt the market will let me back in. Big profits are important. I let one get away in Cotton. I should have been adding, not covering.
$EURUSD, $G6E_F, $UUP, $FXE — The decline on Wednesday completed a classic 6-point symmetrical triangle top. This completed triangle has been violated intraday, but not on a closing basis. I am short, using Thurday’s high as protection. I really thought I tagged a good one on Wednesday. The forex markets are vicious.
$USDJPY, $G6J_F, $FXY — The decline last week completed a triangle, but that is not the real story. Friday’s close is the lowest week-ending close in history, breaching the 1995 low (not shown). We may see Bank of Japan intervene next week, or it may be that the BofJ is capitulating until a lower price level is reached (such as 75.00). I am short $USDJPY and fully expect to have the BofJ run me out of the trade.
S&P 500: $SP_F, $ES_F, $SPY — This is my “pie-in-the-sky” chart. The daily graph displays a possible H&S top. If this analysis is correct (big IF), the right shoulder high is in place. This chart needs to be on everyone’s watch list. I am flat, tempted to go short under last week’s low. The CFTC Committment of Traders data released late last week was bearish.
Soybeans: $ZS_F — This is an extremely intriguing chart. I fully expect that this chart pattern will be completed by an upside breakout — whether the breakout has follow through is a different story. I am lightly long Soybean futures with a stop below the July 12 low. I will add if the market breaks out intraday. I will add more if the market breaks out on a closing basis.
All the above charts are fairly long-term in duration. As a token to you shorter-term chartists, I leave you with Crude Oil. I am not in this market and probably will not become involved due to travel, but an interesting story can be told for getting long.
Crude Oil: $CL_F, $USO — If Crude Oil was in a “for-real” bear trend, then the May low should have turned back any and all rallies. Yet, the market has now climbed back above the May low. This is a sign that the May to June decline was a correction, not the start of a new bear trend.
On a shorter-term basis, the market is forming a 7+ day symmetrical triangle. A completion of this small pattern would probably lead to a test of the June 1 high at 104+. See the hourly chart below.
Let me throw in a couple of final charts. For the first time in a very long time I have some encouraging words for the millions of you who think Natural Gas prices are too cheap.
Natural Gas: $NG_F, $UNG, $UNL, $GAZ — Being long Nat. Gas ETFs has been a losing game due to the huge carrying charges that disappear each month. The weekly chart of UNG shows the result of this time decay.
This time decay may continue to take place, but I can say with as much certainty as possible that the physical market has bottomed. The chart of Natural Gas futures shows that the market has lifted well off the 2010 low and is forming high lows and higher highs.
There is also some signs that UNG has bottomed — the March low may hold, despite the massive supply on hand and the negative publicity on fracking.
While there may come a time to be long the ETFs for the physical commodity, I would prefer to own the ETF for the producers and other companies deriving income from the production and processing of the product. A chart of FCG ends this post.
Markets: $AUDCAD, $SI_F, $SLV, $GC_F, $GLD, $IAU, $CT_F, $EURUSD, $FXE, $UUP, $ZS_F, $SP_F, $SPY, $CL_F, $USO, $USDJPY, $G6J_F, $UNG, $UNL, $GAZ, $FCG
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Some charts I am looking at now – June 16
/by Peter BrandtThere are a few charts that really have my attention right now — although that does not necessarily mean I have a position or will enter a position in these markets. It does mean that I have a position or am looking at strategies to establish a position in these markets.
First, Crude Oil. I have commented several times in recent weeks via this blog or on Chart.ly on the recent consolidation zone. It now appears as though a descending triangle is being completed. Look for confirmation, but be aware that a bear trap could also occur. This is one of those patterns that could provide a head fake to the downside but provide big profits on the upside. But for now, I am short in my proprietary account with relatively tight stops.
Next, I will focus on one of the best potential chart set ups I have seen in a year or so — Natural Gas. The January 2012 contract displays a classic H&S bottom on both the daily and weekly charts. A major bottom is being constructed in this market. I am sure I will comment many times on this pattern and the trading implications in futures and ETFs. [Note: Dan Chesler, an excellent energy market analyst, brought this chart to my attention. Dan’s web site is www.chesler.us]
Next, Copper. I have been bearish on this chart for weeks, but the market is making it hard for position traders who sell weakness. Yet, the market is rolling over. What appeared to be a bear flag has now turned into an awkward 5-week continuation H&S pattern. If the trend has really turned down prices could easily drop $1 per pound in two months.
Next, Soybean Oil. I have had an upward bias in this market based on a possible continuation inverted H&S pattern. However, a sharp drop would complete a H&S failure sell signal. Also, the closing price chart (and I am paying more attention to closing price charts because of increased market “noise”) has completed a symmetrical triangle top. I am presently short Bean Oil, but I will remain flexible.
Next, July Chicago Wheat. If there ever was a H&S top pattern for the books, this is it. The problem is that H&S tops are supposed to occur after a large move up (i.e., tops are supposed to reverse a previous trend). This pattern does not qualify for this criteria in that the pattern itself WAS the move up. Nevertheless, this is a facinating chart worthy of following. I may or may not go short Wheat.
Next, July Silver. This market is in a major bear trend. The daily chart completed a H&S failure pattern on June 13 when the June 3 low was penetrated. I want to make a MAJOR point here, folks. I trade based on set-ups, knowing that 60% of my set-ups will fail over an extended period of time (over shorter time frames in the past, up to 80% of my signals have failed to produce profitable trades). I comment on set-ups, not on market opinions.
Finally, DYY (the ultra long commodity ETF). I am engaged in a short-selling campaign in this ETF. See previous posts here and here. I will pursue the strategy I have already disclosed. I am short two layers of DYY and will short a third layer if the H&S top is completed.
That’s all for now, folks.
Symbols related to this post: $ZW_F $DYY $NG_F $ZL_F $SI_F $SLV $CL_F $DJP $SIVR $GAZ $DBA $UNG
Disclaimer: I am a pure chartist. I do not trade based on fundamental or macro-economic factors.
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