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Is Natural Gas a Better Bet Than Gold?

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Both commodities surged. Here's the technical analysis showing why it might be time to buy natural gas.

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The following are the latest daily summaries of my ongoing intraday coverage, providing context to interpret price action. Any prices listed are for a contract's current "front month." Their direction tends to correlate with any ETFs listed for each.

Today's Highlight: Gold plunged and natural gas surged, each confirming expectations that recent near-term extremes had formed. But while gold had signaled its momentum was reversing down, natural gas left had signaled only that its drop was losing sponsorship. That seems to have changed… Is it time to buy UNG?

Dollar Basket
Jun Contract DX; (UUP), (UDN)
Monday's gap up pierced Thursday's 79.75 close long enough to fill the gap that Friday's open had created. Closing above 79.75 would signal an actual rally leg underway.

Eurodollar
Jun Contract EC; (FXE)
Friday fulfilled and exceeded the 1.3299 bounce objective. Monday rejected it by gapping back down to Thursday's 1.3135 close, which the session ranged around. Actually resuming the decline requires closing under Monday's 1.3105 low.

Gold
Jun Contract GC; (GLD)
As if any further confirmation was needed that bottom-fishers weren't biting, Monday's open gapped down $19 to probe under 1624.00. The intraday session-long bounce from there tested higher prior lows above 1638.00, leaving the open's gap outstanding to attract price back into the downleg.

Silver
May Contract SI; (SLV)
Overnight action simply slid to fresh lows at 30.45. The pattern that launched the break was ranging too narrowly to predict its resolution, but a close under 30.40 would target 29.55 and then 29.70.

30-Year Treasury
Jun Contract US; (TLT)
There has been no buy signal while awaiting a sell signal to trigger. That hasn't prevented extending higher, and falling stocks have helped. Fresh highs gapped up to new highs at 142-24 and tested 143-04 intraday. Closing above 142-28 would get a benefit of the doubt for launching a new rally leg. Otherwise, now closing under 142-10 would target 141-06 and lower.

Crude Oil
Jun Contract CL; (USO)
Another probe under 102.75 (102.25 basis May), it was recovered yet again by closing above 103.00. Now closing above 103.85-104.15 would target 107.75 and potentially much higher.

Natural Gas
May Contract NG; (UNG)
Ongoing efforts to trend below 1.98 resumed abruptly Thursday. No sell signal was triggered, and no consecutive lower close Friday confirmed. Monday exploited this by recovering gradually back above last Tuesday and Wednesday's highs to 2.01. Momentum has reversed up so long as 1.98 holds as support… UNG has also bottomed by closing above 14.95, so long as 14.75 holds tests as support, targeting 17.85 and 20.00.

Editor's note: Rod's analytical techniques are designed to efficiently identify targets and turning points for any liquid stock or market in any time frame. He applies his techniques live intraday, primarily to S&P futures, at RodDavid .com.
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No positions in stocks mentioned.
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