Tuesday, July 7, 2009

Natural Gas and UNG are Caput: Exit Shorts; Next is Hurricanes

On June 22 we posted a straddle on UNG . It is currently returning 34%:

UNG is now again badly breaking down and reaching an all-time low:

Note the very high volume as mom & pop investors and traders are sucked into buying UNG (in spite of our numerous warnings!). Today I exited short positions on natural gas.

There are still no immediate compelling reasons to go long on natural gas, particularly on something like UNG which suffers from contango and contract rollovers. Stay away! However, we exited our shorts as the profits were simply too big to ignore. The trade is done.

We will be looking later in July at establishing long positions, which are strictly weather plays (hurricane season).

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