Oil & Gas - Energy - Commodities - Resources (OILBRENT)

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Warning: Natural Gas (UNG) Looking Bearish and THE Sector to Watch!
By: Erin Swenlin | September 4, 2020

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It may seem strange to write a negative review of an ETF after it just made a 4%+ move today, but I wrote to my subscribers earlier this week about the bearish warning signs on Natural Gas (UNG). While admittedly I'm not quite as bearish, given the price action today and the shift in the RSI, there are still bearish warning signs. If you recall, I wrote about UNG in ChartWatchers back on July 24th and then again for my Diamond subscribers on July 26th after the big drop, giving them an even better entry. I know many of them pulled the trigger and so I decided to let them (and you) know there are problems on the UNG chart.

Back to UNG: The PMO has triggered a crossover SELL signal in very overbought territory. The RSI is looking okay now, but I don't like the configuration of the OBV and SCTR, which dove much much lower. If you do own it, that $13.00 level is a good "line in the sand." It held up today and, if it holds up going into next week with improving volume, it should be a good hold. The 50-EMA could also provide support, but, if that $13 level is lost, I expect you'll see more selling.



Every Friday, when I write the DP Diamonds Report Recap, I pick a sector (or two) that we should watch in the coming week. It gives me some direction as to where I want to "mine" for my Diamonds in the coming week.

I like Financials (XLF) going into next week and I will continue to monitor the Energy sector -- when money begins rotating to Energy, you can bet I'll be looking for bargains for my Diamonds subscribers.

However, my top pick for next week is the Materials sector (XLB). I wrote about the rotation out of technology and what appears to be rotation into materials. The chart below is from our Sector ChartList (subscriber-only) on the DecisionPoint.com website. Carl does the annotations and updates them daily on all three of our DecisionPoint.com ChartLists!

What I love about our sector charts is that all of the pertinent indicators are there, including our newest... the Silver Cross Index (SCI) and Golden Cross Index (GCI). The SCI measures the %stocks that have a 20-EMA above their 50-EMA (silver cross) and the GCI measures %stocks that have their 50-EMA above their 200-EMA (golden cross). Notice the positive confirmations on most of these indicators. We are seeing greater participation based on the %Stocks indicators. Additionally, the BPI, SCI and GCI are all confirming the rotation into Materials. Strength is building in this sector.



Conclusion: UNG is acting "toppy," so keep an eye on the $13.00 support level! Materials (XLB) looks like the sector I'll be watching this week for Diamonds. I just finished up my DP "Diamond Mine" trading room this morning for Diamonds subscribers only. This intimate trading room is fantastic and is certainly worth the price of admission by subscribing to our Diamonds Reports. We examined the Diamonds presented this week and symbols to watch in the coming week. I cover how to enter and exit stocks to improve your trading...

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Happy Charting! - Erin

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