For some reason, my distribution of the Daily yesterday did not go out — we are seeking the solution. Should you not receive the Daily in the future – please go to the web-site and access the Daily there. I highly suggest you read yesterday’s Daily because it references to today’s.
Discussed yesterday the market testing the lows for the sixth consecutive week and on the five previous found sponsorship to rebound. Yesterday makes it six straight. I also have been discussing the winter strip, summarizing the need for the strip to consolidate some of the recent gains by retracing back to $2.70 ish. Noticed today that it traded as low as $2.69, which was good to see. I want to show you how the upcoming December 2020 contract may trade compared to the upcoming summer contracts. Look back at 2016 (the last time prices traded to $1.61), in the chart above, notice how the December 2016 contract was extended to a $1.00 premium over the May contract. Interesting, as the December 2020 contract traded $1.10 over the May yesterday. In 2016, the market closed the gap in the spread over the course of the summer and the closure was from the summer months rising and the Dec 2016 contract consolidating in a range until October. This is another reason why I am not sure you want to chase the winter strip– adding to positions on declines to support may be beneficial over the longer term- but there will be more “bang-for-the-buck” in the upcoming summer months, should prices garner the support to break through resistance.
For the sixth consecutive week, prices have traded down below the key support level of $1.61 and into the $1.50’s only to find significant support. Not sure how many more times the bears want to beat their heads against that wall — time will only tell. In the mean time — play the profitable range that started yesterday.
Major Support: $1.611, $1.555–$1.519, $1.481
Major Resistance:$1.883, $1.993, $2.029, $2.08-$2.10, $2.34, $2.437,
Minor Resistance: $1.767-$1.78, $1.833