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NFTRH+; A Natural Gas Sector Look-Ahead

An NFTRH+ post sent to the whole subscriber list because it is also a macro update on a key commodity…

Here is the daily chart of NatGas breaking out of a pleasant looking pattern.  This short-term pattern targets 3.35 or so.  MACD and RSI look very good as they are positive but not stretched.

natural gas, daily chart

The weekly chart adds context, however.  It is right at long-term resistance.  A break through and hold above 3.10 puts an ultimate target of around 4.50 on Natty.  So the short-term pattern controls the long-term situation.

natural gas weekly chart

As for ways to play the sector, one could buy the often frustrating UNG (Nat Gas ETF), which has consistently under performed Natural Gas due to futures market carrying costs.  These costs have been greatly reduced of late and UNG has been keeping up with the commodity very well lately and its chart looks good on the short-term.  Here’s the daily.  It is virtually identical to NatGas.  The target on UNG would be approximately 9.60 if Gas makes it above current long-term resistance.

ung daily chart

I think I would prefer to use the Natural Gas Index Fund, FCG (thank you Joe for the heads up on this ETF).  Here is a list of its top 10 holdings per ETFdb.com.

fcg top 10 holdings

Here is the daily chart.  FCG made a breakout similar to that of Energy ETF XLE, which we warned about (long-term resistance was just over head) a couple weeks ago.  And like XLE, it was summarily pounded back down to the 50 day averages, where I bought it.  I’ll keep this position as long as a) the chart of Natural Gas remains constructive, in daily breakout mode, b) the macro looks conducive to a coming inflation problem and c) FCG remains in the channel.

fcg daily chart

We won’t do the usual buy, sell, stop loss parameters because they are covered above in one way or another.  Natural Gas should hold the 2.95 area, UNG 8.60 and FCG 24.60 for all to remain stable.

A reminder that chart based NFTRH+ updates are technical trade setup ideas, which may not be revisited as the buy, sell, stop parameters are already noted. They are meant as a starting point for further research if interested. I will not personally buy every item highlighted and will sometimes sell – without prior notice (because this takes time and resource away from NFTRH’s main functions) – any item that I do buy, below target, which is something I often do as a trader. Also please be aware that I am not a fundamental stock analyst. Due diligence is your responsibility.