Expiration Find Strength

Weekly Continuation

As the last twelve months has proven — expiration’s have proven well bid into the expiration. This month seems to continue that trend if you look at the trade in the light President’s Day trade with prices rallying over $.35. This last week’s strong gains, moved the consensus of technical indicators (which is heavily weighted to the prompt contract) improved but remained neutral. This analysis is primarily because of the failure to close greater than the continuation 20 – week SMA. The last time prompt gas closed higher was week ending November 26th.

Given March’s rally from trend line support ( short – term trend line drawn from its December and January lows), with diminishing volume (the number of contracts traded each day during the past week was less than the corresponding day last week) and failure at the continuation 20 – week SMA suggests that addition long term gains may be limited. Until the market demonstrates that the late tenure sponsorship that has characterized the long string of expiring contract months has dissipated…or disappeared, it should be assumed that it will continue. When something has happened twelve of thirteen times, my bets are going to expect it to continue.

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