Energy ETF: Oil (USO) and UNG (Natural Gas)

If you are looking for no brainer stocks investment opportunity, you can look at these two energy ETF, USO (United States Oil Fund) and UNG (United States Natural Gas Fund). Energy is a necessity is any economy and we need it every day. Imagine how we are going to live in the modern day without energy.

 

Energy related stock or ETF have direct correlation with the economy activities. When economy recovery gathers pace, the energy demand and consumption increase and thus drive the energy price up.

 

Looking at both USO and UNG charts, these two ETF are super under value and post the greatest upside potential. Downside is limited because now we are in slow recovery mode unless the whole world enters into double recession.

 

USO

•  Background: The United States Oil Fund, LP ("USO") is a domestic exchange traded security designed to track the movements of light, sweet crude oil ("West Texas Intermediate"). USO issues units that may be purchased and sold on the NYSE Arca.
• Historical High: US$118
• Current Price: about US$36 

 

 

 UNG  

• Background: The United States Natural Gas Fund LP (UNG) is an exchange traded security that is designed to track in percentage terms the movements of natural gas prices. UNG issues units that may be purchased and sold on the NYSE Arca. 
• Historical High: US$64 
• Current Price: about US$6 

 

Assuming both ETF shoot up to HALF of the historical high when the economy is fully recover, you can do your math how much upside potential the ETF have…. If you look back the chart in Jan – June 2008, you can see how the bull pushed the price up close to 100% within 6 months. If you time it right, you will be able to achieve your handsome retirement plan. If you are not good at how to time the entry, you can just start to accumulate these ETF and hold for a few years. I am sure you will be rewarded pretty handsomely because you are buying low now and selling high later. 

 

Additional Useful Information for your reference:

• If you want to learn how to trade ETF safely, click here.
• If you want to find out more on the energy related information for your long term investment, check it out the report here. Hottest Investment Plays In North America: Oil And Gas Bulletin. – by Keith Schaefer 

Disclaimer: This is my own analysis and it is not a recommendation to buy or sell the ETF. Use the information at your own risk.

 

The Start of Bear Market?

DOW Jones Industrial, S&P500 and NASDAQ Composite have all broken the 200D MA support. All three indices show similar chart pattern and currently traded at about 23.6% Fibonacci Retracement Level. There will be probably a short term bullish rebound from this support level before continuing the bearish down trend. Also take note that all three indices were unable to break the 50D MA resistance and turned down.

DOW JONES INDUSTRIAL

• Resistance: 20D MA and 200D MA
• Support: 10,109 (23.6% Fibonacci Retracement Level) and 10,000 (psychological support)
• Target Correction Level: 9,428 (38.2% Fibonacci Retracement Level)

SNP 500

• Resistance: 20D MA and 200D MA
• Support: 1,094 (23.6% Fibonacci Retracement Level)
• Target Correction Level: 1,014 (38.2% Fibonacci Retracement Level)

NASDAQ COMPOSITE

• Resistance: 2,322 (previous resistance in Dec 2009) and 20D MA
• Support: 2,230 (23.6% Fibonacci Retracement Level) and 200D MA
• Target Correction Level: 2,046 (38.2% Fibonacci Retracement Level)

 

STI - 200D MA Support Broken!

STI has broken the 200D MA support and is heading to test 2660 (23.6% Fibonacci Retracement Level). If this support fails to hold, a bigger correction will happen and STI may go all the way to 2430. The current chart looks bearish but STI may rebound from 2660 support in near term but will face the resistance (200D MA) at about 2770.