Monday ETF Wrap-Up: UNG Surges, VXX Plummets

The United States Natural Gas Fund (UNG) surged more than 6% in trading Monday as investors looked ahead to forecasts of cold weather in major gas-consuming regions. Brisk temperatures are expected in the Midwest and Northeast over the next two weeks, giving natural gas a big boost after a year of declining prices. Huge discoveries of recoverable reserves have weighed on gas prices throughout 2009, as have expectations of a generally moderate winter season. Shares of UNG are down nearly 50% on the year, but have gained almost 35% since bottoming out in early September.

Elsewhere, coal ETFs jumped as Barron’s said Monday it expects global coal use to jump 55% by 2025 amid strong demand from China and India. The PowerShares Global Coal ETF (PKOL) was up about 4%, while the Market Vectors Coal ETF (KOL) gained 3.7%.

On the other end of the spectrum, the iPath S&P 500 VIX Short Term Futures ETN (VXX) started the week on a down note, dropping nearly 4% after equity markets rebounded sharply following a tough end to last week. After reaching record highs during the height of the global recession in 2008, major volatility barometers have declined sharply this year, although the VIX still remains above its 20-year historical average.

Disclosure: No positions at time of writing.

Comments

[shawn finan...:]

VXX looks like a steal right now as a very over sold security; according to several indicator: Stochastic, RSI and MAC-D among others. The downward trend seems to be hitting the bottom of a long downward trend, and is possibly forming a wedge pattern. Something seems to be forming with the Bollinger pattern not to mention a convergence of short and long term beginning to converge. Watch for a break out soon.

Oct 10 10:35 PM