Natural Gas “Island” Bottom, Momentum and Buffett’s Buy

Michele Schneider

It’s rare to see an island bottom.

However, the one in UNG or the ETF for natural gas had a classic one.

After making new all-time lows, an island confirmed suggests a reversal of the down trend.

But that’s not all, Warren Buffett bought Dominion Energy, a company that heats and cools 7.5 million customers (small) in 18 states with electricity and natural gas.

For Buffett this is a value play.

For me, after seeing the UNG chart, I like to think of it as also a commodities play.

Why else is this island bottom so compelling?

natural gas etf price bottom rally ahead forecast chart image july 8

The other two indicators on the chart are MarketGauge Proprietary indicators.

The middle one is a price performance comparison to a key benchmark.

UNG has begun to outperform that benchmark.

The bottom chart shows our Real Motion indicator.

And that’s where things get really interesting.

The momentum shows price well above the 50-DMA while the actual price trades just below the 50-DMA.

This type of divergence is compelling and worth watching to see if price can catch up to momentum.

Island bottom, momentum and Buffett-now there is an oh my!

S&P 500 (SPY) 318.22 is a gap that must fill. 315 pivotal 310 support

Russell 2000 (IWM) 141 then 137 support 146.50 resistance

Dow (DIA) 257 support 262.50 resistance 

Nasdaq (QQQ) Inverted hammer doji after making new highs..could be forced selling could be a reversal

KRE (Regional Banks) Hinging on support here

SMH (Semiconductors) 155 support-160 target

IYT (Transportation) 161.50 pivotal support 170 resistance 

IBB (Biotechnology) 137.60 closest support

XRT (Retail) 43.40 huge support to hold

Volatility Index (VXX) Still in caution phase, but also clears 32.70

Junk Bonds (JNK) 104.50 resistance 101.50 support 

LQD (iShs iBoxx High yield Bonds) New highs again-watch 134.90

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The author may have a position in the mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.

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