Monday, May 18, 2009
Trade Of The Day - Natural Gas ETF Shows Continued Strength
by Houghton and Atkeson.
United States Natural Gas Fund (UNG) -- As Sam mentioned on Friday, this trust invests directly in futures contracts on natural gas and is traded on the NYMEX. We see further evidence of UNG's strength.
The price of UNG has been in a steady decline since July 2008 when it was trading at more than $63. Today, it is about $16.
Virtually every market-traded asset has seen appreciation since the March low, including oil, which has rebounded from about $30 per barrel to the mid-$50s. Natural gas typically has a high positive correlation with oil. (see image above)
In the past few days, a lot has changed for UNG. From a technical standpoint, it is beginning to breakout from its 10-month decline on rising volume. We believe UNG has hit its lows and there is a high likelihood the gas ETF will climb above $20.
Join me tomorrow as a bring you another hot trade of the day in this new segment; Trade of the day.
Good investing, Kingsley.