Author: Willis Bennett

Break Out Upon Us

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I apologize for providing a Daily Chart from Wednesday — I am traveling back to CO and my screen editor does not like the fact I only have one screen. The market broke above the highs from Oct and Nov and I was expecting more of short covering rally– but no such luck. Now the key for the market is to hold the old resistance as support and to build on the break out through the expiration. Some elements would suggest that the real fun will start on options expiration between $3.35-$3.50.

Major Support: $3.396, $3.198, $3.129, $3.00 $2.914-$2.886, $2.78,
Minor Support:
Major Resistance: $3.396, $3.482, $3.526

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Range Expanded

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An interesting trade day as prices started off like the break out above the Oct/Nov highs was a given, then they just traded within a 3penny range until the end when they declined. Thought for sure that the breakout was coming and if it does come with a close above $3.396– kiss that retest I was (still am) expecting good bye. Currently, it is a test of support at $3.129 (didn’t quite get that low – a penny off) and now it is testing resistance and this is a large resistance area. A break above (daily close) and short covering will likely take prices up to $3.48 and develop a new scenario of the rest of 2021.

Major Support: $3.198, $3.129, $3.00 $2.914-$2.886, $2.78, $2.71-$2.70
Minor Support: $2.694
Major Resistance: $3.321-$3.33, $3.369-$3.396, $3.482

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Test of Support — Not Yet

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Yesterday, I highlighted that prices may build on the declines from Monday to test support levels. The market had other ideas. As I stated yesterday, I do think we will get a test of support levels lower during the expiration process but for now, we look range bound heading into the expiration.

Major Support: $3.198, $3.12, $3.00 $2.914-$2.886, $2.78, $2.71-$2.70
Minor Support: $2.694
Major Resistance: $3.321-$3.33, $3.369-$3.396, $3.482

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Churn, Churn to the Downside

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Prices started the test of support but found some support after posting a 8 day low. This should not be the only test (per the Weekly summary) of support and before expiration, expect a serious test of $3.10 down to $3.00.

Major Support: $3.198, $3.12, $3.00 $2.914-$2.886, $2.78, $2.71-$2.70
Minor Support: $2.694
Major Resistance: $3.321-$3.33, $3.369-$3.396, $3.482

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New Week Look for Weakness

Having issues loading charts on this internet connection — was going to load the Daily and mention that after last week’s reversal — see Weekly section– the July contract has likely posted the high side of its expiration range. The market now should define the low side of the range.

Major Support: $3.198, $3.12, $3.00 $2.914-$2.886, $2.78, $2.71-$2.70
Minor Support: $2.694
Major Resistance: $3.321-$3.33, $3.369-$3.396, $3.482

July Contract Rally Has Work to Do

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Last week, prompt July posted a new contract high and on Tuesday the prompt pushed a little further into the resistance zone between the February and October highs and appeared ready to test resistance presented by the October and November ’20 highs. July made it as far as 3.369 but with substantially reduced volume (333,249 contracts vs 633,921 on Monday) reversed lower and failed to find adequate support at/above Monday’s low. Trading a daily reversal with with increasing volume led to a lower weekly close after trading a rally high with weekly volume significantly less than the prior week. As discussed here numerous times that rallies need to be fed (volume), and that volume divergence (a higher high on lower volume) is a strong suggestion that July has traded the high of its tenure– whether it is the Q2 high remains to be seen.

Rallies from Q1 lows to Q2 highs have averaged 38.2% over the last ten years, 39.8% over the last five (43.4% over the last twenty). With last weeks rally from the March 18th low at 2.422 to this past week’s June high at 3.369 prompt gas has rallied .947, or 39.1%. That is fairly close to the five- and ten-year averages– but I am not convinced that the strength is finished (yes- I realize that a rally in July takes it out of the Q2 — but last June’s low at $1.42 was out of the Q3 but was the Q3 low).

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No Surprise

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As discussed yesterday, there was no surprise in the storage report yesterday and the reclassification of the gas behind PGE. Market now needs to continue to test support zones and seems to be getting some help from the rising dollar (bizarre as that sounds– discussed that a week ago). I am not taking positions on gas based upon the dollar quite yet — but I am tracking the two. Play the low end of the range from last week for support.

Major Support: $3.198, $3.12, $3.00 $2.914-$2.886, $2.78, $2.71-$2.70
Minor Support: $2.694
Major Resistance: $3.321-$3.33, $3.396, $3.482

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Folks Know About Storage Adjustment

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A lot of you fundamental traders have been alerting me to the big working gas reclassification coming in the report today. Trust me — if I know about some fundamental related issue — the world knows about it. It will be interesting to see how the market trades around it — my inclination is to approach with caution — failed at the highs lets see how the market defines support after digesting the PG&E “adjustment”. Question for you conspiracy folks against gas utilities– do you think there is a possibility that the utility (or its storage management division) bought some PGE basis prior to the announcement — say for the last quarter? Just asking.

Major Support: $3.198, $3.12, $3.00 $2.914-$2.886, $2.78, $2.71-$2.70
Minor Support: $2.694
Major Resistance: $3.321-$3.33, $3.396, $3.482

2nd Run at Nov Highs Fails

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The second attempt to set a new high failed and as a result prices immediately declined. The declines will test areas of support from last week and as discussed yesterday — may well be the most positive event for an extension of the recent rally later this month or into July.

Major Support: $3.198, $3.12, $3.00 $2.914-$2.886, $2.78, $2.71-$2.70
Minor Support: $2.694
Major Resistance: $3.321-$3.33, $3.396, $3.482

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All Systems Go

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It certainly seems like all systems are go for a test and break out above the highs from last fall ($3.396). With that said, I was startled to see the early and preliminary numbers for open interest declining yesterday with volume declining and the RSI still in the extreme zone on the Daily chart. Perhaps some folks are booking profits at the technical highs- will have to wait and see. I still believe that prices have to retest support zones in order to build the base for a rally that can take prices another 10-15% higher (perhaps not during the summer).

Major Support: $3.198, $3.12, $3.00 $2.914-$2.886, $2.78, $2.71-$2.70
Minor Support: $$3.251, $2.694
Major Resistance: $3.321-$3.33, $3.396, $3.482

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