Ain't it a gas?! Natural gas making a good low to buy

Natural gas has repeatedly punished anyone who tried a buy-and-hold strategy - we've had to take swing trading gains by selling into rallies. Is that changing now? Looks like it may well be. After I remarked a few weeks ago that it looked like UNG (the natural gas ETF) was making a 4th-wave bounce liable to roll over to another low - it did. Now we're watching closely to buy the low because it looks like the best opportunity in a very, very long time is finally shaping up. There's positive divergence on my hourly and daily UNG charts (below). And borrowing from Tony Caldaro's Objective Elliott Wave charts of natural gas ($NatGas daily and weekly charts, which also show positive divergence, further below), it appears Tony's expecting the low to reverse upward for a good move, too. You can check out all Tony's charts, and his commentaries and blog discussions, at his "the Elliott Wave Lives On" site in the sites links listing at right.

If UNG can be successful reaching $14 again, that would be more than double its recent pricing around $6 (and $12 was also an important level in its descent, therefore another, more moderate target). But let's be realistic too. First it needs to confirm it's finished its low - and it might have, but I can't rule out the possibility of one remaining poke lower soon. Either way, UNG's first near-term target will be a bounce greater than 10%, to $6.76. In cash market trading today, UNG almost closed a gap recently left behind on its last price drop. Moving over today's high would help give it a more bullish chart pattern too. Positive divergence in indicators like the money flow (CMF) shows that significant money is becoming interested in UNG and natural gas at these levels and time. (The winter heating season is traditionally deemed bullish for natural gas.) Whenever UNG takes out $6.76, it should be on the road to higher levels.

So if you've been burnt by the "natural gas flame", get over it and start positioning for a long swing trade that can also support an investment position. Once we start seeing higher highs with good volumes on the buys, we'll know we're onto it and can adjust stop-loss orders accordingly (such as just under a higher low, for example). We'll KI$$ - Keep It Simple Swing - and keep an eye on it!