Bearish fundamentals, growing stock piles of natural gas consistently above their one and five-year averages, support the bears. While natural gas (price) is often discussed in terms of supply and demand or 'the fundamentals', a minority of independent thinkers quickly recognizes it's driven by human behavior.
Interactive Chart: UNG
A negative long-term trend oscillator (LTCO) defines a down impulse from 20.83 to 8.86 since the fourth week of July 2014 (chart 1). The bears control the trend until reversed by a bullish crossover. Compression (white circles) generally anticipates this change.
A close above 26.83 jumps the creek and transitions the trend from mark down to cause.
Chart 1
Leverage
A positive long-term leverage oscillator (LTLO) defines an up impulse and bear phase since the third week of June 2014 (chart 2). This supports the decline (see price).
A diffusion index (DI) of 20% defines Q2 accumulation (chart 3). A capitulation index (CAP) of 41% supports this message (chart 4). DI and CAP's trends, broader flows of leverage and sentiment from extreme accumulation (green dotted line) to distribution and extreme fear (green dotted line) to complacency supporting the bulls (red arrows), should not only continue to extreme concentrations but also restrain downside expectations until reversed (see price).
Continuation of the decline within these trends represents a sign of weakness (SOW). This is bearish for natural gas longer-term.
Chart 2
Chart 3
Chart 4
Time/Cycle
The 5-year seasonal cycle defines weakness until the end of the year (chart 5). This path of least resistance restrains upside expectations (see price).
Chart 5