We still think that the December low is the low, for the foreseeable future. The move from 1.68 to 2.50 has all the characteristics of a wave one. Wave 2 is scary in that it is, or will be, retracing wave one almost entirely. This is fairly normal but also rather exhausting if you are waiting for it to go higher. In the chart there is room for a minor wave 5 to complete the C. However, it may well be that the bottom was already reached at $1.80 a few days ago.
See our blog of Dec. 8th. This is a nice start and still has a lot of potential. With natural gas at US $ 1.68 you could not have gone much lower before you might as well start flaring the stuff again.
Another look at Natgas. Long-term charts are hard to come by but this one is relatively good and at least 20+ years.
Roughly speaking we have triple bottomed three times (double Dutch??) in the past 5 or 6 years at about (again roughly $2) Back in 1995 or so that was roughly also the bottom for quite an extended period. That suggests that somewhere around $2 there is a lot of support. However it should be noted that the absolute lows were more in the order of $1.25 (just eyeballing the chart).
In terms of buying low and selling high, the only sure way of making money, it is obvious that with gas down 87% from the peak you are a lot closer to the low than the high. Still I would wait at least for the price to better the $1.90 low of April 2012 before making a move.
The HNU, leveraged up ETF looks pretty good from an EW perspective and RSI;
Somewhere here it should bottom. Here is another chart;
Natgas futures are showing a potentially serious buying opportunity. Given all the overlap, at various degrees, and the fact that this is in all likelihood a 5th wave, the most probable pattern is that of an expanding diagonal. If so, then a rather violent retracement, most often right to the start, should follow. This would be in synch with our view that oil has or will bottom soon and will rebound for a few months.
The best way to play this is by purchasing the HNU, the Horizons Beta Pro 2X Natgas Bull ETF. We have played this game very successfully before and believe this is the time to do it again. See previous blogs for HNU. To put the present value in a historic perspective below are two longer term charts for the futures and HNU;
Clearly we are closer to the bottoms than the tops, all we need now is a little chill which we are actually getting as we speak.