Apart from its reverse split, which leaves us with half the number of shares at double the price, the overall technical condition and setup in the U.S. Natural Gas Fund ETF (UNG) remain very constructive for near-term upside continuation towards 11.00 next.

First, however, the UNG must hurdle and sustain above yesterday's recovery high at 10.46, which will "lock in" Monday's all-time low at 9.98 as a very significant near-term low -- and possibly intermediate-term low as well.

Today's action is interesting if only because natural gas and the UNG are not participating in an otherwise weak session in the commodity complex. Do we sense downside exhaustion in the natural gas commodity sector? If that proves to be the case, then the entrenched giant short position in the UNG will blow apart the doorjam trying to exit the building.

 

Mike Paulenoff is a 26-year veteran of the financial markets and author of MPTrader.com.