Monday, August 24, 2009

Natural Gas: Are We There Yet?



click on chart to enlarge

The NG chart has an UPDATED Elliott count reflecting an extension in the 5th wave. Hate it when that happens. It is however, not uncommon and probably results from the extreme sentiment in a final move. There is some hourly RSI divergence but sentiment can get more extreme AND this market has some serious negative fundamentals.

Is the count down complete? The Long Term target IS 1.95 as C=A. BUT the probability that C down from 15.78 IS nearing completion is high, and NG IS in it's seasonal window for a low. Additionally, in the CFTC COT O.I. report as of 08/20, spec shorts were 268,673 + 19,850, vs spec longs 93,346 -1457. Not sure how this is reconciled against the UNG long position but it's a huge position representing 35.5 % of all shorts and nearly as large as the commercial longs at 322,981.

NG can have a short term bounce at anytime and the maturity of the move down makes it tough to be short.

Any rally would NOT be confirmed until it overlapped 4.08 , the beginning of this leg down. However that's a long way off, so I am using the overlap of the last little 5 COUNT DOWN FROM 2.99 as an early tell. An overlap of 2.99 would also take out the trendline.

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