Since the previous edition of the Sterling Weekly, the Dow Jones Industrial Average declined a whopping 8.54 points, to finish at 10,609.65 In terms of weekly change, last week was probably the least volatile week I've seen in the 20 years I've been active in the market. I thought I would take a look at the NYSE-ARCA Natural Gas Index 'XNG' this week. The 'XNG' set a new 12 month closing high of 567.11 on January 6th of this year, and despite pulling back recently the trend still remains to the upside.

The companies in the 'XNG' companies primarily involved in natural gas exploration, production, and pipeline transportation and transmission. The components include Williams Co. 'WMB', EOG Resources 'EOG', and Devon Energy 'DVN' to name a few. A full list of the components of the 'XNG' can be found on the Sterling page covering the 'XNG' (here).

I've include a long term chart of the 'XNG' below that shows the 'XNG' reaching its all-time closing high of 761.11 on June 23, 2008, and the subsequent downward movement that followed with the onset of the credit crisis of late 2008. Since the market bottomed in March of last year, the 'XNG' has been in a new upward trend as indicated by the trendline on the chart. Additionally there is a "cup & handle" pattern that provides for a measured move from the current level approximately 555 to the 601 level. This should take the 'XNG' to the upper end of the resistance on the chart. If the 'XNG' is able to close above the resistance levels, then the 'XNG' should be able to retest its previous all-time closing high of 761.11 On a longer term basis, if the XNG is able to close above 761, then our multi-year target on the 'XNG' is over 1,100.

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