My overall technical work in the ProShares Ultrashort Oil & Gas ETF (DUG) treats all of the action from the October 17 low at 37.17 to the November 29 high at 46.56 as the first phase of an intermediate-term recovery rally. The plunge from the November 27 high to Friday's low at 41.40 (so far) represents an intervening pullback that separates two major legs of a recovery phase.

If my work proves correct, then within a matter of hours the DUG should take off to begin the secondary recovery upleg that should propel the price structure above 46.56 on the way to 51.00. At this juncture, only a break under 41.00 will begin to compromise my current outlook.



Mike Paulenoff is a 26-year veteran of the financial markets and author of MPTrader.com, a real-time diary of his technical chart analysis and trading alerts on all major markets. For more of Mike Paulenoff, sign up for a free 15-Day trial to his MPTrader Diary by clicking here.