29May12:18 pmEST

They'll Need to Go Fishing in the Red

Natural gas seems to be an interesting niche within the commodities complex, with strident perma-bulls and perms-bears alike chirping with each rally and swoon.

I have not traded natty much in recent months, though long-time readers know I have traded UGAZ (the triple-long natural gas ETF) with fairly good results in recent years, occasionally getting caught in and quickly cutting a gap down, but also capturing plenty of 15-25% upside winners along the way. 

Recently, natty rallied sharply into mid-May before a downdraft ensued after a pronounced bearish engulfing reversal candlestick, seen the daily chart for the UNG ETF, below. Natty is now oversold, below its lower Bollinger Band. 

But it is lagging other commodities (crude, namely) today, which are bouncing with the weaker Dollar. I do not see a buy signal yet. So if natty bulls want this one they will have to starting fishing in the red, and right away. If you do pick the bottom, I suggest a stop-loss below today's lows on UNG of $12.81. 

 

Watch the Flank Update on the Eastern Front

 
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