Why I Didn’t Buy UNG

By -

I was looking at UNG yesterday (the natural gas ETF), and it seemed a bit tempting as a long. As we all know, natural gas is never going to go to $0, and other energy/commodity items had been doing well. It would be easy to rationalize such a purchase, since UNG was a relative "bargain."

But then I asked myself: In this environment, where energy has had every benefit imaginable, why would you choose something which has, on the whole, been such a rotten performer? Because I figured, at the first sign of even any weakness, UNG would be the first to tumble. So I didn't do anything. I just left it alone.

Good thing, too. UNG is down nearly 4% today alone, near a lifetime low. And this is in the context of a market in which almost all assets are up huge. Just something to keep in mind when you are looking at a chart that looks "cheap."

You might even want to use ProphetCharts' expansion feature on items that are near their lows to create some white space beneath the chart. Because seeing a price near the "bottom" of a chart might create a false sense of security. It's not a floor, my friends. It's simply the minimum of the y-axis range.

0118-UNG