Author: Willis Bennett

Trends Suggest Strength

Daily Continuation

Discussed last week about the recent trend of rallies at the first of the week (4 of the last 6) but now we have an opening coming off a lower weekly close which is a first in the last six weeks. It will be interesting to see how the market reacts, especially coming of the declines late last week. Those declines would suggest a weak opening but the early trade Sunday night, have some slight strength. Still waiting for some consolidation or declines to soften the extremely over bought condition.

Major Support:$5.416, $5.341, $5.17, $4.88, $4.61, $4.537,$4.375, $4.211, $4.156, $3.92, $3.821,
Minor Support: $5.62-$5.633, $4.728-$4.70, $4.66
Major Resistance: $5.876, $6.24-$6.493

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Expect Volatility to Continue

Weekly Continuation

The Nov contract traded through the September high marking the fourth straight year that the Nov contract has done that (see last week’s conversation about Q4 runs and sarcasm), further into the resistance area between the January ’09 and January ’14 highs (6.240 – 6.493) before reversing lower. The reverse sent prompt gas and the coming winter strip closed lower for the first time in seven weeks. However the Q2 ’22 months, summer ’22, as well as the further months strips were higher. Volume and open interest were lower as price failed at a higher high and November closed slightly lower than it had opened when trading resumed on Sunday, suggesting the lack of an appetite for prompt gas above $6.

The elevated level of volatility, the reversals traded this week and previous weeks as prices traded over $6, the near weekly doji (prompt gas closed at 5.556 after opening at 5.628 and traded a new high in between) may be suggesting that Nov contract is vulnerable to a more significant retracement. Like a broken clock, I have been suggesting that the rally is overextended and due for a correction for the last month or so.

Major Support:$5.416, $5.341, $5.17, $4.88, $4.61, $4.537,$4.375, $4.211, $4.156, $3.92, $3.821,
Minor Support: $5.62-$5.633, $4.728-$4.70, $4.66
Major Resistance: $5.876, $6.24-$6.493

Continues to Mature??

Daily Continuous

It was good to see prices retrace and test support at last week’s low, just wish they had gotten a little closer but to no avail. The rebound was expected and now prices may head back up to retest some of the resistance areas that proved substantial earlier in the week. Some fundamental folks sent me emails that Russia President Putin said he was going to support supplies to Europe– Novel idea as prices are over $30. That led to declines in the TTF (Europe contract) which led to yesterday’s declines. I apologize — but how you fundamental folks trade and make money when Putin can affect price movement is way over my pay grade. I got ripped, by only a couple of readers, this week for being sarcastic. My o My. Good luck- I will stay focused on the Henry Hub price (from a technical standpoint) and try to make a little more money in this run. BTW — winter is still coming (sarcasm alert).

Major Support:$5.416, $5.341, $5.17, $4.88, $4.61, $4.537,$4.375, $4.211, $4.156, $3.92, $3.821, $3.722,
Minor Support: $5.62, $4.728-$4.70, $4.66
Major Resistance: $6.24-$6.493

Stunned

Daily Continuation

The reversal yesterday was stunning (after setting a higher high), but what was more stunning was the response from my Daily yesterday. Most of you know and understand, that the basis of my trade comments is generated from the historical activity that demonstrates the market goes up in the early winter (I call it the Q4 high), goes down as the winter gets defined (I call the Q1 lows), goes up in the early spring (I call it the Q2 high) and finally goes down in late summer early fall (I call it the Q3 lows). I had a “tongue in cheek or sarcastic” comment about the rally, recently, had not even taken into consideration the upcoming winter forecasts. The response from a couple of subscribers was stunning, as I was ridiculed for not understanding that this whole move was based upon the upcoming winter. Oh– Wow your kidding– OK. I guess my sarcasm should not continue in the written form.– Good Luck –ain’t going to happen. Guess the moves in all the previous years (Q4) was by luck and not the expectations of upcoming winters. It is good to know that this year is so different than prior years, with the rally being based on the expectations of the upcoming winter (attn: sarcasm alert). Gee, I haven’t even seen a forecast for storms in November, yet, but I doubt it would effect my trade. BTW — my resistance level held the gains yesterday before the meltdown, so I understand the market looks out of control but it is showing signs (occasionally) of conformity. .

Major Support:$5.416, $5.341, $5.17, $4.88, $4.61, $4.537,$4.375, $4.211, $4.156, $3.92, $3.821, $3.722,
Minor Support: $5.62, $4.728-$4.70, $4.66
Major Resistance: $6.24-$6.493

Teenager Returns

Daily Continuous

Thought maturity in the market had arrived — little did I know that the teenager was in the wings waiting to stretch its legs taking the trading range over $.50 and blowing through the $6.00 level. Some of you have contacted me about selling some of the hedges we set into position last summer and spring— I can not recommend selling anything into this run until the market sends some signals that the silliness is going to end. Reasons for that center around the potential of Henry Hub running up to $8-$10 before this run is over. There will be corrections taking price down for a day or two, but the over-riding trend is (has been) strength. So unless you want to actively manage (sell and buy back) your hedge positions– stay back and work on other more pressing issues. Did I mention– winter forecasts have not yet been priced into the action.

Major Support:$5.416, $5.341, $5.17, $4.88, $4.61, $4.537,$4.375, $4.211, $4.156, $3.92, $3.821, $3.722,
Minor Support: $4.728-$4.70, $4.66
Major Resistance: $6.24-$6.493

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Some Signs of Calming

Daily Continuous

I know this is a reach but the market actually showed some signs of maturity– after ripping upward over $6.00 it, again retraced rather than hold the gains. At $4 and $5 once it ripped up the chase was on. Perhaps my need to see some consolidation is clouding my vision that prices will just continue to jump leaps and bounds– but the trader in me has seen many of these events since 1991 and if they don’t build orderly — then it gets ugly real quick.

Major Support:$5.416, $5.341, $5.17, $4.88, $4.61, $4.537,$4.375, $4.211, $4.156, $3.92, $3.821, $3.722,
Minor Support: $4.728-$4.70, $4.66
Major Resistance: $5.93, $5.88-$6

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New Week — Looks Like Rally Runs

Daily Continuous

Prices opened higher Sunday night – so expect the trade to follow four of the last six Monday’s with stronger prices. Explained some of the recent trends in the Weekly section, so I suggest a quick read. Where do prices go— I would guess somewhere between $6.00 and $5.17 in the near term. Many fundamental reasons are spurring this radical trade of the last few weeks — how does that turn out — no clue. Technical data points suggests that consolidation and calming (discussed last week) will need to occur to support further significant gains in the fourth quarter.

Major Support:$5.416, $5.341, $5.17, $4.88, $4.61, $4.537,$4.375, $4.211, $4.156, $3.92, $3.821, $3.722,
Minor Support: $4.728-$4.70, $4.66
Major Resistance: $5.93, $5.88-$6.493, $6.318

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Unsustainable

Weekly Continuous

I am well aware that many of you are frustrated with me continually talking about the over bought status of natural gas and the technical indicators that just confirm that status. When does the market moderate — none of us have a clue but I wanted to bring you some additional information supporting some consolidation in the price action. The natural gas prices have settled higher for six consecutive weeks during this run. Of those six weeks, prices started with strength (either Sunday night or Monday) four times and opened the week lower the other two time. Obviously, regardless of prices starting weak early in the week, the market finished higher by Friday.

Another element to the current price run is the range of prices as measured by the ATR (Average True Range) which measures the price range from high to low for the week or the day. In the Weekly chart below you can see the ATR readings for the last 15 weeks, noting it is at levels not seen since Oct ’18 through Jan ’19.

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That Is Not Chillin

Daily Continuous

The daily ranges for the four trading days this week are $.675, $.653, $.678 and $.534– one flat, one down and two up. This daily range is not sustainable over extended periods of time. It is that reason for my column yesterday that the Nat Gas market needs to chill. It did not happen (as I suggested yesterday) with a storage release — but the release didn’t effect prices at the time of the release but provided a base for prices to run on. Does it chill today — I will not try to guess, not going to short this rally but will be taking some profits if it gets too silly. Prices remain in the extreme over bought zones on almost all momentum charts.

Major Support:$5.65, $5.17, $4.88, $4.61, $4.537,$4.375, $4.211, $4.156, $3.92, $3.821, $3.722,
Minor Support: $4.728-$4.70, $4.66
Major Resistance: $5.93, $5.88-$6.493, $6.318

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Natural Needs to Chill

Daily Continuous

This market needs to chill and consolidate somewhere along the way. Last weeks declines did not take the Weekly RSI out of the extreme zone and then Monday’s parabolic move moved the indicator to extreme levels not seen in years. All this volatility is great for us who trade it, but it does not invoke confidence for those folks who use it or produce it. As expected, the market declined as Nov took over as prompt. I am not convinced that there will be a decline in volatility today as we get a storage release that usually increases volume and volatility. Speaking of volume, Tuesday’s run and retracement was the second highest volume day of the month. The highest was the day gas ran to $5.65 then retraced– expiration Tuesday was just behind it in volume as prices set a higher high (+$6.30) only to retrace. Odd coincidence I guess. Yes, the market needs to take a breath (possibly retrace more), just not sure today will provide calm or provide more oxygen to the rocket ship.

Major Support: $5.17, $4.88, $4.61, $4.537,$4.375, $4.211, $4.156, $3.92, $3.821, $3.722,
Minor Support: $4.728-$4.70, $4.66
Major Resistance: $5.65, $5.93, $5.88-$6.493

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