Dec Takes Over as Prompt Giving Up Some of Differential
When trading was initiated, the declines from the previous week were extended another $.153. Extremely oversold, about to expire November reversed from a “sold out” condition, and rallied almost exactly a dollar (21%). November traded a $.755/dt range on its last trading day, then settled with one of the widest closing range in memory $4.948 – $5.438. After a brief failed attempt to build on the extraordinary premium awarded over expired November ($.689 vs $.004 a year ago and $.295 in ’20), new prompt December, which had traded as high as $6.281 fell to $5.547, before finding support and ending well off the low.
Over the last couple of week’s there has been discussions of the “technical damage” that occurred to the charts during the rapid declines in October. The violations of trend line, moving average and conventional support that occurred almost entirely without any intervening rallies. While this week’s reversal was a strong suggestion that the gas market was “sold out”, the market has a lot of work to do before any significant rally can be sustained. Further evidence of that can be found in the market’s inability to hold onto gains (selling the rallies concept). December closed $.579 lower than the high it traded on Tuesday with selling clearly evident at its 10 – day SMA from Tuesday until Friday, $.339 off its low. The most important factor for December will be whether it can consolidate within the range it traded during the past week. If it is unable to do that then look for a test of the low of November’s closing range ($4.948).