Tainted Alpha

I eagerly started my strategy series and invested opposite the same day. So much on strategy and trading having common points. The United States Natural Gas Fund (UNG) has hit new lows yesterday and I couldn’t resist taking a position. I bought ATM April Calls. Had to close FXY position (with a small profit) to reduce portfolio risk.

Chart 1. United States Natural Gas Fund (UNG)

I stick with my fundamental view that the demand is not recovering and supply falling fast enough to remove the glut, but from a short-term trading point I see the fund being oversold. The EIA natural gas report could be the catalyst today as colder weather could lead to some sort of a draw from the stocks. If it doesn’t rebound in next few days, will close the position.

CurrencyShares Japanese Yen Trust (FXY), Natural Gas, United States Natural Gas Fund (UNG)

This entry was posted on Thursday, December 3rd, 2009 at 7:54 am and is filed under Commodities. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.