It’s funny, when times are good and the security in question is
hitting new 52-week highs, the commentary seems to revolve around
“buying the dip”. We get that in US Stocks, we heard it about Japan this
year, and in the Spring we were certainly seeing that “buy the dip”
mentality regarding Natural Gas after prices more than doubled in less
than a year.
Well, in Natural Gas we got it. A third of the entire move off last
year’s lows has just been retraced. On Monday, Natgas Futures hit the
lowest prices since February. So was that it? Was that the correction,
the dip to buy, if you will?
I think it can be. Take a look at the daily bar chart of
$NG_F
We’ve now retraced 38.2% of the
rip-your-face-off rally
from last year’s lows. And on these new lows this week, shorts are
excited and longs are getting stopped out. This can be a nice recipe for
a correction low in Natural Gas. I think we can look at $3.50 as a key
level. This was support from the consolidation throughout most of July.
And there is memory here from 6 months ago. So I think it would be a
bullish development to see natty back above there.
Remember, the intermediate trend in NatGas is still up. And in the
short-term we’ve seen a pretty steep correction. So I’d be at least
watching this one a little bit closer down here.
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