Natural Gas (UNG) Update

Last October, I went long UNG because of a completed Elliot Wave pattern. Since then, there has been a bit of upside progress, but I believe the market is setting up for a much bigger move to come soon.

Notice in the chart above that price did bottom out shortly after I suggested going long. However, the rally has been rather shallow. What strikes me as bullish is that there have been several sharp attempts to make new lows during the past few months, but each selloff was bought, which indicates a lack of overall supply (basing action).

We are currently at trendline resistance, but I believe that because the COT data shows commercial traders holding their largest long position in months, price will ultimately break higher. My target is $12 on UNG.

Out of SLV put

I was short SLV via a Jan put, and today I closed it out for a profit. Because it’s expiring in 7 days, I didn’t want to hold and risk a rally in Silver prices. However, it was a hard decision because of the fact that gold just broke down from an ending diagonal, and when that happens, prices can drop very quickly. Either way, it was a nice trade!

Silver Breaks Down

As I pointed out a week ago, metals were on the razor’s edge. I projected a target of $31.66 for silver, and we got within 1% of that target. I’m not sure what will unfold going forward, but I think the $31.28 top will be significant, and I would not be surprised to see silver hit $25-$27 soon.

Notice in this chart that, as expected, prices reversed fast after breaking out of the triangle. Also, price broke an uptrend line on high volume, so conditions for further decline remain ripe.

SPX 1290 is the level to watch

If SPX does reverse soon, as I’m expecting, 1290 looks like a good level for the market to peak at.

Notice in the chart above that not only is 1290 the level where Wave-C = .5*Wave-A, it is also the exact level where Wave-v of Wave-C = Wave-i of Wave-C. These tight Fibonacci correlations lend support to the idea that the market will top out around 1290.