Natural Gas (UNG) has been in a bear market for years. That may be ending with a base-building accumulation phase that has continued for some months. The UNG Market Location chart shows about 7 months of recent data. Although UNG has good technical strength and is looking bullish over this relatively short period it has underperformed the broad market by more than 12%.
The accumulation-distribution line is heading South. The Wyckoff Tape Reader chart (below), shows net distribution sampled over 5 minute periods for each daily price bar. Although we think the longer term prospects for UNG are very, very good we don’t want to get ahead of the price charts and have to suffer through a drawdown or, even worse, take a loss on a too-early trade.
The UNG weekly chart (below) shows what we interpret as a base-building accumulation. It doesn’t have to happen just because we want it to, but chart-reading experience suggests that UNG will test one or more of its recent lows before taking off to the upside in a markup phase. Will it retrace all the way back to the lowest point? Technical strength suggests not.
Natural Gas may be providing the same explosive profit-making opportunities that the gold miners and the oil producers did during the first half of 2016. So, even if you are not interested in UNG for its own sake it’s still worth your attention because of the affect natural gas prices will have on the gas exploration and production stocks.