The oil and gas sector finally is on the move, perhaps in reaction to the decline of the dollar (commodity relationship). Since last Friday, the Proshares UltraLong Oil & Gas Sector ETF (DIG) climbed from 34.00 to 36.32, or +6.8%. More importantly, the rally off of the October 2 low at 29.13 also broke above a one-year resistance plateau at the 34.00 level as well, which has measured upside potential targets of 44.50 and 51.00.

So why don't I just fly into a new long position now? Largely because the DIG is up 24% in eight trading sessions, and exhibits a near term upleg pattern that is at or very close to completion prior to a pullback. Could the DIG continue higher to test the top of its July-October channel at in the vicinity of 37.00? Definitely yes, but that represents another 2% on the upside juxtaposed against risk of a retracement back into the 34.00-33.00 area, or -5% to -8%. No thanks. I will take my chances and sit out a bit longer, looking for a revisit to the upside breakout area in the upcoming hours or days prior to entering a new long position.

Mike Paulenoff is a 26-year veteran of the financial markets and author of MPTrader.com.