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Standout Energy Sector Performer, Tests Key Support


LITMUS TEST for Cheniere Energy, Inc. (LNG)?

Let's notice that since Sept 18, when LNG climbed to its all-time high at 85.00 (off of its Oct 4, 2011 low at 3.17!), the stock has dropped precipitously into this morning's low of 64.56-- or 24%.

Let's also notice that today's low was less than 1.5% from a full-fledged test of the rising 200-day EMA, now in the vicinity of 64.65.

Thus far, the 200-Day EMA has worked its magic, triggering a U-Turn to the upside from 64.56 to 71.12 (+10% off of today's low).

Has LNG finished a major correction?

Perhaps. Granted, LNG is a member of the beleaguered energy sector-- a Natural Gas producer, liquefier, and exporter, which has been under intense pressure from falling oil and derivative prices since June, and certainly is overdue for a period of strength.

However, my intermediate-term pattern work argues strongly that any forthcoming period of strength should be considered a relief rally within a larger, still-unfolding and incomplete corrective process that should resume after this bounce runs its course.

Somewhere in the 71-75 resistance zone, I will be expecting LNG to reverse to the downside for a retest of the 200-Day EMA, in route to a test of its major support line, now at 60.00.

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