Category Archives: UNG

Supply ‘Disruption’ & Nat-Gas

March 26, 2024 By in Food Supply, Natural Gas, UNG, ZeroHedge 1 Comment

Playing Out, In Real Time

Bridge in Baltimore collapses after container ship strike; major port is ‘paralyzed’.

Harvard to screen a movie about blowing up pipelines, and then:

Nat-gas rachets down; volatility is low, all quiet, for now.

Strategy First

It’s been almost a year since the first post, discussing the potential for a disruption to the nat-gas supply.

A lot of things have happened since then.

For example, large speculators have likely been forced-out of the UNG, proxy. Quoting from the link above, August of last year, we have this:

“If everybody’s ready for it … it won’t happen at all or not when it’s expected to happen.”

So, the crowd and the crowded trade, is probably gone.

Then, we have continuing infrastructure disconnects, like the bridge collapse above, the aviation sector, and cattle (the food supply), to name just a few.

Looking at the weekly of UNG, with Force Index (lower panel), we see downside pressure is dissipating.

Natural Gas UNG, ETF, Weekly

Weekly thrusts lower, have less energy (magenta arrow)

In addition to weakening downside force, the weekly range is also becoming more narrow (blue arrow).

So far, there’re no signs of increased demand, and UNG can continue on its way to lower levels.

However, we’re already at multi-year lows; indicating, with each net downside move, downside risk is also being reduced (not advice, not a recommendation).

Stay Tuned

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Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.

The Danger Point®, trade mark: No. 6,505,279

Nat-Gas … Heading Lower?

March 20, 2024 By in BOIL, David Weis, Livermore, Natural Gas, UNG, Wyckoff 1 Comment

No Breakout, Yet

The upside breakout anticipated and discussed in the last update has not materialized.

Instead of UNG, moving higher to penetrate 16.08, it’s moving lower.

We’re already at multi-decade lows, in Wyckoff spring position.

So, let’s look at what’s going on, getting down to a more granular level, the hourly chart.

Nat-Gas, UNG, Hourly

Action on the hourly shows a breakdown from a wedge.

Standard ‘measured move’ shows potential for UNG to target 14.50 – 14.60, (not advice, not a recommendation).

We’re already at historic lows, so continued downside may just be splitting hairs.

Strategy First

From a strategic standpoint, already discussed, is our new-normal environment of ‘disruption‘.

Expecting uninterrupted access to our current infrastructure is not the reality.

If UNG, manages to post new lows, we’ll address the potential for a strategic, long position (not advice, not a recommendation).

My former mentor, the late David Weis had a penchant for looking at the very long term, even yearly charts.

This also maps into Jesse Livermore’s approach; identify what’s likely to happen in a ‘big way’.

Remember, we have the EIA Nat-Gas report coming up, typically released on Thursday.

Stay Tuned

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Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.

The Danger Point®, trade mark: No. 6,505,279

Nat-Gas … Terminal Wedge

March 17, 2024 By in BOIL, Natural Gas, UNG, Wyckoff 2 Comments

Futures Open Higher, Late Sunday Session

Nat-Gas just opened higher, currently +2.52%, at 1.834, in the Sunday session.

A continued move higher past 1.893, on the NGK24, futures may indicate a potential breakout from a terminating wedge.

We’ll use the chart of UNG, heavily traded, highly liquid proxy for the sector.

Nat-Gas UNG, Weekly

It’s relatively straightforward.

An upside penetration of UNG 16.08, indicates probability of a breakout (not advice, not a recommendation).

On an inflation adjusted basis, Nat-gas is below the 2020 lows, and 26-year lows (i.e. Wyckoff ‘spring’ position), as shown at this link.

Stay Tuned

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Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.

The Danger Point®, trade mark: No. 6,505,279

The Usual Suspects

December 16, 2023 By in $SPSIBI, AMT, Biotech, BOIL, Bonds, CVNA, DRI, Federal Reserve, Food Supply, Genesis 41, GLD, Gold & Silver, Gold Miners, IYR, LABD, Natural Gas, Real Estate, Semiconductors, SLV, SOXS, SOXX, SPBIO, TBT, TLT, Uneducated Economist, UNG, Usual Suspects, WEAT, Wyckoff, XBI 1 Comment

Everything Happening At Once?

Not in any particular order; not advice and not a recommendation.

No 1. There (still) is no Fed Pivot. Seriously, have rates really, actually been lowered? Everyone has a huge case of ‘normalcy bias’. i.e., what the Fed did last time will happen this time.

The 40-year bond bull market from the 80’s, ended in 2020. We’re in a different paradigm now.

No. 2 Natual Gas UNG, is reversing. We’ll see whether or not there’s going to be a supply disruption.

No. 3 The semiconductors SOXX, now have a monthly bearish MACD divergence; daily and the weekly indicators posting even to prior tops (as of Friday’s close). 

No. 4 Components of biotech index XBI, are being shuffled around faster than deck chairs on the Titanic … or, the Olympic 🙂

Seems like a mad dash to add/remove, increase, reduce equities to prop things up. We’ll see how that turns out. Currently, XBI is right at resistance level, 86.50 – 87.0

Here’s just one example from an index, riddled with equities that have no P/E.

No. 5 Carvana is very close to posting new highs and potentially, running the stops.

No. 6 Has Darden Restaurants, topped out? 

The consumer is certainly tapped-out and no-one ‘needs’ a restaurant.

No. 7 Wheat is reversing; It is and has always been about the food supply.

No. 8 Gold, GLD, is currently not going higher (look at the divergences); silver (SLV) is in a major non-confirmation, down nearly – 55%, from all-time highs.

During the 1980s inflation, precious metals moved (upward) together.

Silver looks like it’s responding to the destruction/collapse of (economic) demand.

No. 9 American Tower (AMT), number two in the IYR index, posts a clear false breakout and reversal. 

If rates really are going (materially) lower, interest rate sensitive real estate should continue going higher, right?

No. 10 Which brings us to the bond market, TLT. 

Price action broke above established resistance, currently hovering above that level. 

It’s at The Danger Point®

We can see the set-up, a price action pattern repeated time and again, between the lower and upper blue lines, called a ‘Spring-to-Up-Thrust.

While the media laughs at the bears, let’s just see how this all works out.

Stay Tuned

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Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.

The Danger Point®, trade mark: No. 6,505,279

The ‘Sleeper’ Trade

December 1, 2023 By in Natural Gas, Positions, UNG, UNG-23-07, UNG-23-08

All Quiet, In Nat-Gas

We’re likely in the ‘Desperation’ phase of the Nat-Gas market.

Longs have literally been beaten to a place where there appears to be no more downside.

Today’s opening posted a new daily low of only 0.01-pt, before reversing, now trading higher (as of 1:17 p.m., EST).

Nat-Gas UNG, Hourly

One more new low, then reversal.

An hour-long upside bar shows ‘Sign of Demand’ and then a shallow retrace.

Positioning

Yesterday’s trade UNG-23-07, was exited in today’s pre-market session at the stop low of UNG 5.44 (not advice, not a recommendation).

After the upside reversal, the trade was re-opened.

The new position is labeled UNG-23-08 with a Hard Stop at today’s low of UNG 5.43 (not advice, not a recommendation).

Stay Tuned

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Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.

The Danger Point®, trade mark: No. 6,505,279

UNG … Target Lows, Reversing

November 30, 2023 By in Natural Gas, Positions, UNG, UNG-23-07

Price Capitulation?

Since early October, the Nat-Gas longs have been absolutely bludgeoned.

UNG, went from a high of UNG 7.98, to today’s low of UNG 5.44, a – 32%, decline (almost, ’33’) in just a Fibonacci 8-Weeks.

Now, UNG may have capitulated.

When looking at the Nat-Gas Jan-24 futures NGF24, (hourly chart) we see a large volume spike near Tuesday’s low and today’s.

Massive volume spikes, typically represent capitulation.

The (weak) longs have sold out.

Nat-Gas: The Set-Up

The work has already been done here, here, and here on the potential opportunity for a long position in Nat-Gas.

With that said, as UNG hit the ‘5.55’ target and then declined slightly, an initial position was opened at UNG 5.4999 (not advice, not a recommendation).

Nat-Gas-UNG, Daily

Price action hovers near the ‘5.55’ target for three days and now appears to be reversing.

As this post is being created (11:55 a.m., EST) UNG appears to be moving away from the session lows.

Positioning

Trade entry as shown @ UNG 5.4999 (not advice, not a recommendation).

Trade is labeled as UNG-23-07

Hard Stop is TBD but will most likely be the session low @ UNG 5.44 for a ‘risk’ of 0.06-pts/share.

Stay Tuned

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Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.

The Danger Point®, trade mark: No. 6,505,279

Nat-Gas … New Lows

November 22, 2023 By in $SPSIBI, Biotech, LABD, LABD-23-13, Natural Gas, Positions, SPBIO, UNG, XBI 1 Comment

The Longs, Getting Crushed … For Now

The premise for a Nat-Gas (long) trade has not gone away.

The fact this market (UNG) is beating the longs senseless, is a potential indicator in itself.

Evidence continues to mount, uninterrupted access to anything is a luxury; one is prudent to consider the potential effects of supply disruption.

For Nat-Gas UNG, there’s more to the story; it’s following a Fibonacci projection as we’ll see below.

Nat-Gas UNG Daily, Fibonacci Projection

If the projection holds, next lower level is UNG 5.55 area.

As far as where Nat-Gas goes from here, anything can happen; it could even go negative just like the crude futures did back in April of 2020.

Positioning

Nat-Gas: There are no positions in UNG at this point (not advice, not a recommendation).

However, if UNG does decline to the 5.55 area, just the ‘value’ itself will be enticing.

Biotech: While the 3X Leveraged Inverse Fund LABD, posted a new daily low (just after the open), SPBIO, $SPSIBI, indices and the XBI, ETF have not yet posted new daily highs (which would have negated the short trade).

This in a nutshell, is what makes shorting the market with a highly leveraged inverse fund (and doing it effectively) a challenge at times.

The short position LABD-23-13, has been maintained with a new Hard Stop @ LABD 18.40 (not advice, not a recommendation).

Stay Tuned

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Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.

The Danger Point®, trade mark: No. 6,505,279

Silver Upside Breakout

November 16, 2023 By in Gold & Silver, Positions, SLV, UNG, UNG-23-05, zsl, ZSL-23-01 1 Comment

Above Resistance, In (Potential) Trouble

So, Tuesday, the shorts were carried out on stretchers.

No matter the sharp upward spike, short covering has not changed the tsunami; the ‘liquidity crisis‘.

Basically, there’s not enough cash to go around, not enough in a big way.

Is it possible, in the coming year, there will be huge demand for cash … fiat cash?

With that backdrop we have silver (SLV) making lower highs and lower lows.

Silver SLV, Daily

The chart shows a breakout above resistance. The question is, can it hold?

With price action where it is, just above resistance, SLV is at The Danger Point®

If it can’t push materially higher from here, it’s at risk of reversal.

Positioning

Silver:

With the above conditions and potential for downside, a short position was opened via Leveraged Inverse Fund ZSL

Entry at ZSL 18.18 (not advice, not a recommendation).

Hard Stop is TBD but will likely be the session low @ ZSL 18.04.

Trade is, ZSL-23-01

Natural Gas:

Trade UNG-23-05, was stopped out this session at UNG 6.44 for a minor profit of 0.10-pts.

Stay Tuned

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Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.

The Danger Point®, trade mark: No. 6,505,279

Nat-Gas & Real Estate

November 14, 2023 By in IYR, Natural Gas, Positions, Real Estate, SRS, SRS-23-03, UNG, UNG-23-05

Stopped-Out

Sometimes you feel like kicking the computer.

In a way, today is, and is not, that day.

The IYR short, SRS-23-03, was stopped-out for a loss of 0.32-pts, about – 1.68%.

Not too bad, but not the desired outcome (not advice, not a recommendation).

As of this post (2:10 p.m., EST), the UNG trade (UNG-23-05) is testing its reversal, covered in this update.

Nat-Gas, UNG, Daily

Coming back to test a reversal as shown above, is normal market behavior. One just has to wait for the market to work itself out.

Positioning

The initial position UNG-23-05, remains intact with a hard Stop at 6.29 (not advice, not a recommendation).

However, after today’s session, that stop is likely to be moved to the day’s low; currently UNG 6.43 (not advice, not a recommendation.

Any further downside testing after today points probability to a trade failure.

Stay Tuned

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Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.

The Danger Point®, trade mark: No. 6,505,279

Nat-Gas Washout, New Lows

November 10, 2023 By in Natural Gas, Positions, UNG, UNG-23-05, Wyckoff 1 Comment

Is Now, The Time?

Let’s remind ourselves why there’s trading interest in Nat-Gas; putting it succinctly, ‘disruption‘.

We have disruption in nearly everything else (food supply, auto parts, medicines), why not the infrastructure?

The premise for the opportunity (if one can call it that), was discussed months ago. The work, the idea, the strategy has already been covered.

It turns out, other professionals had the same idea, prompting this update.

Those speculators needed to be washed out before a potential set-up could be created.

We may be there now; Nat-Gas proxy, UNG, is at The Danger Point® (not advice, not a recommendation).

Nat-Gas UNG, Daily

As of this post (10:45 a.m., EST), UNG has penetrated support and is trading in a narrow range.

Breaking below support (blue line) puts UNG, in Wyckoff Spring Position, ready for potential reversal.

Note the heavy down volume (purple oval) with little net downside progress.

Positioning

Could UNG post lower? Certainly, anything can happen.

Have the longs been washed out?

Volume, price action and time say, if it has not happened already, we may be close.

An initial long position has been opened at UNG 6.34, with tentative stop at the session low, currently, UNG 6.29 (not advice, not a recommendation).

Trade is identified at UNG-23-05.

Stay Tuned

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Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.

The Danger Point®, trade mark: No. 6,505,279