June 30, 2009 - update on HNU

Today HNU dropped on large volume due to an unfavorable report from the EIA stating that "abundant natural gas supplies converge with weak demand driven by an 8-percent decline in industrial sector consumption."


Although I do like Nat Gas as a long-term play and believe that it will do very well when we are out of the recession and well into recovery, I have to keep to my trade rules and technical signals. My stop-out target is below 5.50 and today I came close to getting stopped out.

We have unsuccessfully tested the 50day moving average, and that is bearish. However, counting today's move, we have also re-tested the 5.50 support level 3 times in the past 2 months and stayed above it.

Let's take a closer look with the 2-day chart, broken down in 5 minute intervals:

The 5.50 support line was tested twice during the day but proved to be strong. However, we are not out of the red zone yet.

I have given this trade time to work but it is starting to go flat. I will look to the next trading days for signs of support, otherwise I will close out the position and stay on the sideline and prepare for another approach in the future.