The Biggest Losing ETF Has Finally Made A Bottom

On several occasions, I have posted about the United States Natural Gas Fund (UNG) as having been the biggest losing ETF of the past few years.

It recently broke its long-term trend line to the upside by +3.48%, while its momentum numbers have improved and are showing the following results:

4-wk: +8.45%

8-wk: +12.76%

12-wk: +14.71%

YTD: -0.42%

Performance for current Buy cycle from 6/3/09: -58.29%

DD% (DrawDown): -62.44%

The 5-year chart above, courtesy of YahooFinance, confirms the turnaround. Is this finally the time to buy UNG?

First, this ETF invests in the near-term futures market, so there is an every present danger of performance limitations and volatility due to contango, as contracts get rolled over.

Second, this fund has just come out of a long-term bear market and it’s uncertain if this is just another dead cat bounce.

However, I can’t overlook the fact that a trend line crossing has occurred, which puts it into buy mode. If you have an aggressive component in you risk profile, you may want to consider some small exposure, but be sure to use my recommended 10% trailing sell stop, just in case UNG heads south again.

Disclosure: No holdings

About Ulli Niemann

Ulli Niemann is the publisher of "The ETF Bully" and is a Registered Investment Advisor. Learn more
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