Friday, February 5, 2010

Natural Gas - Long term forecast

Here is an extract of the highlights from our Natural Gas Special Report published 5th of February 2010:

Natural Gas completed its decline in an "ending diagonal" in September 2009. The structure is revealed in this daily chart of Natural Gas from 11th of September 2009.
                                                              
All charts in this article courtesy of Stockcharts.com.



























                                                     




                                                                



A 3 year weekly chart gives perspective of the decline in wave "C" of "X" over the last couple of years. It looks like a relatively clear 5 wave decline.                                                                                              





































                             
Natural Gas has completed a wave 1 rally up from September 2009 and is currently in a wave 2 correction.

Alternative scenario: The structure may divide into a larger triangle that we would label as a 4th wave which could be completed within several months. The next should then be a final 5th wave down to less than USD 2.50. This scenario is not very likely looking at the larger wave structure.

A weekly long term chart reveals a multi year expanding triangle.
The following weekly chart dated the 5th of February 2010 shows the multi year expanding triangle of natural gas. 
 

If we assume that wave "c" of B of (x) ended in September 2009, the price target for a full C of (y) wave in the expanding triangle would be USD 24 - 39 long term. This should then take many years to complete.

Comparison of Natural Gas to other asset classes:

The Natural Gas Stock Index/Natural Gas Ratio
                                                                          

The natural gas stock index topped long term relative to natural gas commodity in the beginning of September 2009. The slower Full STO is currently on a long term "sell signal". We therefore do not consider natural gas stocks as a good investment as investing directly in the natural gas commodity.

Natural Gas / Gold Ratio

























Natural gas turned up long term relative to gold in early September 2009 and has outperformed gold since then. This was the lowest relative value to gold for decades.

Conclusion.
Avoid shares in natural gas companies because they seem to follow the general stock market more than they follow the price of Natural Gas itself. The right time to buy them would be at the next major stock market bottom. See our separate long term analysis of the stockmarket. Natural Gas' current decline in wave 2 is creating an opportunity that should not be passed.
                                                                             
See more in our Special Report Natural Gas incl.
- Full analysis of the Elliott Wave Pattern in Natural Gas incl. several more charts.
- Fundamental background  and the real beneficiaries of natural gas.
- Trading vehicles and how to invest in Natural Gas.
- When to buy - Timing of the bottom of wave 2 in Natural Gas.
- Comparison and ratio analysis of Natural Gas with other assets classes like crude oil and the stock market.

Special Reports can be purchases for USD 35. The reports are free for members. You can order the report from our web site http://www.elliottwavetechnician.com/.
                                                                 
Geir Solem

http://www.elliottwavetechnician.com/
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