Monday, December 21, 2009

Natural Gas Talk of Investments Last Week

The United States Natural Gas Fund (UNG) gained 1.5% on Friday, the seventh consecutive gain. UNG was boosted by drawdowns in gas inventories and Exxon’s bet on the natural gas sector. Last week, in fact, the news came out that Exxon Mobil (XOM) is taking out XTO Energy (XTO) for $31 billion becoming the fossil fuel of choice for power generation in the United States. On Thursday, the Energy Information Administration reported another drop in U.S. natural gas supplies. After nearly nine months of build-ups, natural gas in storage in the U.S. fell for the second week in a row, this time by 207 billion cubic feet, the EIA said. The drop was much bigger than expected. Expectations for cold weather were the drivers of UNG’s rally, but I suspect a lot of shorts covering in this volatile and argued fund.
UNG force indesx indicator is still up and prices continue to move within the upward channel initiated at the beginning of December with a breakaway gap. The %b indicator just left the overbought level.

In my charts, I used two indicators. The force Index indicator. I used the force index indicator, which is an indicator measuring the force of bulls during uptrends and the force of bears in downtrends. It takes into account price and volume. I applied a 13-day exponential moving average (EMA) of the force index to help track the trend. When the trend is positive, the color is blue; when the trend is negative, the color is red. You can see that the weekly trend has been up since last March. I applied also the %b indicator, which is derived from the Bollinger bands. It measures where the last price is in relation to the bands and it tells us where we are within the bands. %b in this time frame is near the overbought level.

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