Bullish Base for Natural Gas
Posted on February 27, 2012 at 13:15 PM EST
Natural gas could not sustain last week's retest of the prior high at 14.74 in the ProShares Ultra DJ UBS Natural Gas ETF (BOIL) and has looped down towards strong support between 13.00 and 12.50. Nonetheless, my intermediate-term work argues that all of the action since early January represents a developing, powerful base formation in the aftermath of the vicious multi-year bear market. My near-term work indicates that the decline from Feb 17 at 14.74 into last Friday's low at 13.15 is at or near completion ahead of the emergence of a new up-leg that should propel the BOIL to 16.17 in the days directly ahead. Elsewhere among commodity-related equities, we continue to like Silver Wheaton (SLW). For the time being, as long as this morning's low at 38.16 contains any weakness, my near-term work argues that SLW likely is readying itself for another up-leg. Conversely, if 38.16 is violated, that warns me that the correction off of last Thursday's high will dig deeper into, and retrace more of, the most recent up-leg from under 35.00 to above 39.00.
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