As mentioned in the earlier Daily and Weekly writings, the area around $6.45 was key and the action last week confirmed as a rally broke above and sent the soon to expire over $7.00 quickly. Due to the light holiday related trade and the fact that the virus has returned to my chest — I will keep today’s Weekly Comments short. This last week’s exceptional counter seasonal price strength managed to pull the remainder of the winter strip back to and just above its still rising 40 – week SMA. Mentioned “counter” because there is historical evidence that the period around the Thanksgiving holiday is weaker (usually after trading to a pre-holiday high). Perhaps this year will resemble the historical norms with prices weaker during this week’s trade.
The technical indicators…which is heavily weighted to prompt gas, moderated last week and showed improvement this last week. The volume traded during three- and one-half trading days was nearly as high as five trading days last week…average daily volume increasing an estimated 95,000 contracts as prompt gas rallied to and through moving average, conventional and trend line resistance. Open interest declined modestly, suggesting that short covering played only a minor role in the rally—or that new buying was sufficient to offset what was likely a more significant amount of buying to cover contracts previously sold short.