United States Gasoline Fund LP demands patience

Oct 21st, 2013 – Comment

At the moment the MACD and the RSI are neutral at best.


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UGA LOGO

Hi Lou,

I am interested in United States Gasoline Fund. I do not see a seasonal pattern with this stock. I am interested in your thoughts on trying a trade at this time.

Thanks,

Tom

 

Hey Tom,

Thanks for the assignment. United States Gasoline Fund LP (UGA NYSE) is an exchange traded fund that tracks on a percentage basis the price movements of gasoline. In terms of a seasonal trade on gasoline you should read the article written by Don Vialoux and published on February05, 2013 by globeinvestor.com. In the piece he cites a period of seasonal strength for gasoline that runs from late January to late April and that can extend into June.

Here is a link to Don’s view on the subject :

http://www.theglobeandmail.com/globe-investor/funds-and-etfs/etfs/profit-from-seasonal-pain-at-the-pump-with-gas-price-etf/article8251323/

 

An examination of the charts will inform my thoughts on how to best manage UGA.

 

 

 

UGA

The three-year chart depicts the 52-week high of $65.86 which was reached on February 14, 2013. The MACD and the RSI both generated a sell signal at that point driving the units to multiple retests of support near $55.00. In addition there is an existing downtrend that has to be resolved before a new advance can proceed. Finally look for resistance along the 50 and 200-day moving averages as the units attempt to move higher.

 

 

 

 

 

 

UGA2

The six-month chart provides a close-up of the buy signal generated by the MACD and the RSI near $54.00 in late June quickly followed by a sell signal near $63.00 in late July. Not a bad trade in just over three weeks. The momentum indicators also signalled a sell in late August also near $63.00. At the moment the MACD and the RSI are neutral at best.

In examining the charts on your behalf I think the best course of action is to keep your powder dry and see if UGA can break above resistance along the 50 and 200- day moving averages. More likely in the near term would be another retest of support near $54.00.

 

Make it a profitable day and happy capitalism!

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