Author: Willis Bennett

Silent Trade Day

Daily Continuous

Seems the market wants to digest it positioning here as it heads into a light holiday trade weekend. One of the lightest volume days of late. My positioning has not changed will be buying any dips in winter contracts, trying to offset the volatility that may occur in the prompt month. Want to wish you all a great Independence Day celebration as I will not be posting a Daily tomorrow.

Major Support: $6.245, $6.02
Minor Support: $6.19-$6.175
Major Resistance:$6.684, $7.005, $7.66, $7.725, $7.816, $7.955

To read The Daily Call you must be a subscriber (Current members sign in here. )

Quiet (Compared to Recent) Expiration

Daily Continuous

Not sure how to qualify that expiration– prices declined during the beginning of the process– only to find strength the last two days — was the expiration well bid — I would suggest that 10% gains off of the lows signifies a well bid situation for the 16th consecutive month but the strength only took prices back to where they started– so you can’t call it a rally into expiration. Perhaps I will refer to it as a 15+ month trend. What is left for the August contract to take over as prompt and with the recent rebound, perhaps a slight extension of the recent gains. One element is a given — open interest continues to decline (expiration partially responsible) so the potential for volatility is great.

Major Support: $6.245, $6.02
Minor Support: $6.19-$6.175
Major Resistance:$6.684, $7.005, $7.66, $7.725, $7.816, $7.955

To read The Daily Call you must be a subscriber (Current members sign in here. )

Is the Bull Run Over?

Weekly Continuous

Price extended the losses and collapsed below the major support between the April and May lows ($6.247-$6.426) and closing the week below the higher low established during those months. This extension occurred with lower volume (partially due to the holiday), but more important is the decline in open interest. The market is now at the lowest level of open interest since the collapse in Jan ’16 and the Q3 low established in Jul’16. Notice that both of those were lows as the market was struggling with declines and position by the hedging community. Similar to current conditions as traders are not sure how to deal with the one year effects from the war and the LNG situation. It is clear that the recent collapse was partially due to a re-assessment by the fundamental condition from LNG demand loosing 2 Bcf/day (displacing that gas into storage) and the destruction of technical support levels.

So is the bull run over –not sure as if you look at the last lower low, in the chart below, prices traded around the lows for three weeks before breaking out to the upside (2nd chart below).

To read The Daily Call you must be a subscriber (Current members sign in here. )

Collapse Takes Prices to a Lower Low

Daily Continuation

The break down last week had serious technical ramifications (discussed in the Weekly Section) but clearly the close below the major support area bodes for additional declines. The only issue with that is the 15 month trend for expiration being bullish– can prices rally above $6.884 (five day open) to keep that trend securely in track but any serious rally up to the $6.60 will keep the trend open for discussion.

Major Support: $6.245, $6.02
Minor Support: $6.19-$6.175
Major Resistance:$6.684, $7.005, $7.66, $7.725, $7.816, $7.955

To read The Daily Call you must be a subscriber (Current members sign in here. )

Declines Break Support and Challenge Bull Bias

Daily Continuous

Volatility game on big time and prices are selling rallies — does define the end of the bull run since the fall of 2020– no. Does it show the conclusion of the run in 2022 — not sure. Have we finished the expiration process and 15 month trend — not even close– three trading days left and need I remind anyone of the February expiration that sent prices to the first test over $7.00 during the process. Technical damage has occurred this week to the run but prices closed yesterday in that key area between the early April low and early May low (see chart below).

Weekly Continuation with Higher Highs and Higher Lows

Will get into more assessment of the break down on this chart over the weekend if it occurs.

To read The Daily Call you must be a subscriber (Current members sign in here. )

Never a Serious Test

Daily Continuous

Startled that the declines never seriously tested the major support from early May and April ($6.50-$6.42) before finding support again and challenging the $7.00 zone. A couple of you have asked what I consider the expiration process — when I was trading cash and futures the 3-day close (setting up the Indices for the month) and what found out was that time period ran into some “issues” by the industry players. Now I look at the last 5 days of trade to watch for trends. Continue to rely on the 15 month trend of the prompt month rallying during the process. It is a trend until it isn’t. Should the trend break — still waiting for serious test of support.

Major Support: $6.426
Minor Support: $$6.60, $6.245,
Major Resistance:$7.66, $7.725, $7.816, $7.955

To read The Daily Call you must be a subscriber (Current members sign in here. )

Most of Monday Declines Stay

Daily Continuous

Long weekends with Sunday and Monday trading coming into Tuesday are always hard to interpret and this last weekend is no different — with prices off hard on Sunday and Monday only to find some buyers yesterday– supporting the move. After the recent collapse, do price consolidate for a day or two (which would be my expectation) or do they continue the declines. Went into the key area for support on the Weekly section, so I will not re-hash that here as the market is playing with key level for the rest of summer and the expiration trend of the last 15 months.

Major Support: $6.426
Minor Support: $$6.60, $6.245,
Major Resistance:$7.66, $7.725, $7.816, $7.955

To read The Daily Call you must be a subscriber (Current members sign in here. )

Light Trade Extends Declines

Daily Continuation

The last 15 expiring monthly contracts have been well supported into expiration after trading a low near the middle of the month (most of those lows have traded between the 15th and 21st but have traded as early as the 10th and late as the 25th).  July ’21 traded its expiration low on 06/21.  Expect July ’22 to continue that tendency.  Prices softened more in the light Holiday trade but the trend would suggest a low established shortly to be followed by support into expiration early next week.

Major Support: $6.426
Minor Support: $$6.60, $6.245,
Major Resistance:$7.66, $7.725, $7.816, $7.955

To read The Daily Call you must be a subscriber (Current members sign in here. )

Substantive Declines Modify Short Term Bias

Weekly Continuation

On Wednesday June8th, dropped over a dollar in just one hour.  Not to be out done, on Tuesday of last week, July surpassed that unusual event by declining $1.588 (from $8.609 to $7.041) in an hour.Substantial declines, by the prompt contract in the couple of weeks (all from a similar resistance area) should tell us something about the demand for futures contracts on either side on $9. 

This past week total open interest fell 42,829 contracts (through Thursday) bringing the two – week total decline to 84,767…the lowest number of futures contracts outstanding since Labor Day 2016.  It has been discussed here on several occasions, during the rally of ’22 that the level of open interest has contributed mightily to price volatility…both to the upside and downside.  Given the continued lack of participation in hedging, either long or short, expect continued price volatility. 

To read The Daily Call you must be a subscriber (Current members sign in here. )

Juneteenth Celebration

Forgot about the Holiday and not cash trading anymore was not reminded until I noticed the exceptionally light volumes for even a Sunday night- Will not be updating the Weekly section during today Monday as I will attempt to celebrate the Holiday. For now all I can say for those trading is expect a test of the major support for this last launching point for the current bull market at $6.4266 (see chart below). This chart will be key in my Weekly report coming tomorrow.

Weekly Continuation with Higher Highs and Higher Lows

Major Support:$7.36, $7.21, $6.426
Minor Support: $$6.60, $6.245,
Major Resistance:$7.66, $7.725, $7.816, $7.955

To read The Daily Call you must be a subscriber (Current members sign in here. )