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Has the Focus of Trade Changed

Daily Continuous

Daily Continuous

Major Support: $3.037, $2.973, $2.913, $2.82, $2.641,$2.627, $2.546, $2.52, $2.495, $2443,

Minor Support: $2.891, $2.852, $2.727, $2.59

Major Resistance: $3.098, $3.105, $$3.12-$3.13, $3.147,$3.189

Spoke about the market wanting to test support yesterday and Sunday night suggested that was in the cards.  With warming temps coming later in the week and next week, the thinking was that the near term fundamental would carry the trade as it has for the last six weeks.  I come in yesterday and the market is ignoring near fundamentals and started a rally.  Not exactly what I was expecting.  If I didn’t know better, I would suggest that the market seems to be changing its focus from the winter ending inventories (around 2.04 TCF) to the level of supply and the imbalance that currently exists for the upcoming injection season. We will know more in the coming days but from a technical standpoint, prices expired on the 50 day moving average (well above the 200 day) and then continued to run later in the afternoon.  Some of this is short covering (discussed on the Web site) and now prices will have to confirm the focus change with trade this week. Consider the highs of March to be tested and the Jan low should also come under a test.  Should prices continue beyond then there will be additional short covering.  Expect support at what was resistance (50 day and 200 day) and should those levels fall then is just a chase to punish the shorts and not a focus adjustment.

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