If you are familiar with my diatribes over the years, you will recognize one of my strongest historical references is the consistent annual weakness that occurs in Q3on the corrections after the Q2 upward trend in prices. This year will not be different except that the Q2 rally did not end in June (Q2) but spilled over to July (Q3). While it would be more accurate if the market were to conform to the agenda , as traders we need to be flexible (for instance the Q3 low occurred at the end of June as the July contract expired) with our “rules”. History shows us that prices have a tendency to rally in late spring into early summer and then take a hiatus in late summer and early fall. Why this occurs is far beyond my pay grade and don’t really care– focusing on the trade rather than the “why”.
Last week brought a glimpse of the seasonal weakness that should occur in the coming weeks, trading a reversal week after setting a high early in the week before reversing lower during expiration and the end of the week. August gas traded as high as 4.187 before settling at 4.044. That was the highest monthly settlement since December ’18 settled at 4.715. On a weekly closing basis, prompt gas traded a technically price negative reversal lower but without the volume spike that customarily accompanies intermediate term highs. That should provide eager bears with some food for thought. The market has not confirmed the “all clear” against additional runs.
