Today we're taking a trip down a short memory lane -- to this summer. If you recall, a deadly heat wave was plaguing every major U.S. metropolis from Boston to Boise. And the only thing more boiling than the temperatures outside was the prices inside the natural gas futures market.
According to the mainstream financial experts, unlike the dripping people on the street, natural gas prices would NOT be sweating the upside. On this, the following June 6 news item captures the bullish sentiment surrounding the energy:
"Natural Gas Gains On Strong Demand. Ample supplies, strong demand from emerging markets, and uncertainty about the future of nuclear energy could result in a 'Golden Age' for natural gas." (CNN Money)
YET, after soaring to a multi-year high in early June, natural gas's expected "Golden Age" turned into a reddish haze. From their June peak, prices turned down a steep, sustained sell-off to the one-year lows we see today.
Now, while the fundamental analysts used "anticipated" factors to extrapolate where natural gas prices would be in the future, EWI's
Energy Specialty Service and
Global Market Perspective's energy editor Steve Craig was looking at the natural gas Elliott wave structure to form an objective, near-term outlook.
In the May 2011 Global Market Perspective, Steve set the stage for natural gas's summer sell off via this well-timed insight:
"If our count is on target, the current advance will terminate between 4.879 and 6.108... the door to the downside should 'seemingly' swing wide open."
In early June, natural gas prices peaked at the underside of Steve's target at 4.983. In the July Global Market Perspective, Steve maintained his outlook, further cushioning his analysis with the following chart and insight:
"We're still big-picture bears. For now, a much larger decline from the early June peak seems reasonable to expect."
Now, flash ahead to today. On October 10, Steve Craig reviewed his long-term natural gas outlook and presented his newest findings in the intraday portion of
Energy Specialty Service. There, Steve provided the following chart that shows how prices followed the letter of the bearish law (Elliott wave labels have been removed for this article):
The question now is whether natural gas' downtrend has finally reached an end.
Few people would answer that question with more caution and critical analysis than Steve Craig in his intensive
Energy Specialty Service.
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