Natural Gas ETF Shows Continued Strength

05/19/2009 12:01 am EST

Focus: ETFS

Nick Atkeson

Partner, Delta Investment Management, LLC

United States Natural Gas Fund (UNG) - As Sam Collins mentioned last week, 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.

In the past few days, a lot has changed for UNG. From a technical standpoint, it is beginning to break out from its ten-month decline on rising volume. We believe UNG has hit its lows and there is a high likelihood that the gas ETF will climb above $20.

By Nick Atkeson and Andrew Houghton, editors of Big Money Options

 

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