Author: Willis Bennett

July Takes Over

Weekly Continuous

June opened the week with a gap lower on Sunday night only to reverse and close the gap — settling at the higher end of the range it had traded most of the month. Once June was off the board, July, which had followed June’s directional movements, gave up the expiration related gain, retreating to retest its gap lower opening. July had begun trading at 2.920, traded to 2.903 and then rallied to 3.046. Thursday’s low at 2.914 along with June’s pre – expiration low daily close (2.886) likely redefines the key support zone. The new prompt recovered again from that support in typical low volume pre – holiday trade to end calendar May at 2.986 after ending April at 2.978 (developing a theme here). All of the Q2 months have traded down to lower levels, but all were also well – bid into expiration. You may recall that last year those Q2 months were far from well-bid after trading earlier lows.

Spot July Contract

The interesting chart is the Spot July contract which shows a higher low after each rally since the low of July last July. Different from the Continuous chart above, the highs in July have continued to be higher than the previous high which is variant to the Continuous price action. While the highs attained last month ($3.15) fulfill the rally of Q2 over Q1 lows (average rally) I am not convinced that that will turn out to be the final Q2 high. The prompt chart suggests that July has not finished its run.

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Price Start Week in a Rally

Daily Continuous

Price action ended the week on a positive note and opened on Sunday night with a solid run, confirmed on late Monday trade. While the continuous chart continues to show a range trade environment, the spot July chart is more constructive (as discussed in the Weekly section). The directional bias for July will be a battle and currently, the price remains near the top of the resistance zone.

Major Support: $2.914-$2.886, $2.78, $2.71-$2.70, $2.658, $2.52, $2.422-$2.414
Minor Support:$2.876, $2.694, $2.483, $2.162
Major Resistance: $3.01-$3.042, $3.12-$3.15, $3.251, $3.31, $3.396

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Resistance on Expiration

Daily Continuation

Jun expired on the higher side of the range and July quickly traded into the June expiration range. There remains a nickle spread between Jun and Jul and would expect a retracement into that range. The July chart looks more supportive than any of the recent monthly charts and will go into that on the weekend. For now — play the range– and have a great weekend as I will not be publishing a Daily on Friday.

Major Support: $2.883, $2.78, $2.71-$2.70, $2.658, $2.52, $2.422-$2.414
Minor Support:$2.876, $2.694, $2.483, $2.162
Major Resistance: $3.01, $3.12, $3.251, $3.31, $3.396

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Range Trade on Expiration

Daily Continuous

The range trade continued with a slight extension for prices as options expired. The July contract continued to trade between $.06-$.07 premium to the June so now what happens to June may not extend to the July contract. What ever the variance to the June contract it would be wise to expect July to test some part of the expiration range as it takes over as prompt.

Major Support: $2.883, $2.78, $2.71-$2.70, $2.658, $2.52, $2.422-$2.414
Minor Support:$2.876, $2.694, $2.483, $2.162
Major Resistance: $3.01, $3.12, $3.251, $3.31, $3.396

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Rebound Off of Sunday Open

Daily Continuous

Prices gradually rallied during the day to close the small gap from the Sunday night open. No technical variance from what was discussed yesterday and on the Weekly portion of the website. Having some dental work tomorrow — as a result may not be able to write the Daily– and not sure it would make any sense.

Major Support: $2.883, $2.78, $2.71-$2.70, $2.658, $2.52, $2.422-$2.414
Minor Support:$2.876, $2.694, $2.483, $2.162
Major Resistance: $3.01, $3.12, $3.251, $3.31, $3.396

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Failure At Near Term Resistance

Weekly Continuation

Many of you commented last week that the price action reminded you of Feb ’21 when the market rallied (primarily on short covering) only to reverse by the end of the week forming a distinct bearish weekly reversal. Great observations– while the Feb rally to prices just short of the early Nov ’20 highs, last weeks rally stopped on the declining trend line of resistance (Nov ’19 highs and the Feb ’21 high). The reversal was quite sudden (similar to Feb) and left a bearish reversal.

Weekly Continuous with Bollinger Bands

The failure at the trend line was also confirmed by the failure at two standard deviations over the 20 Week SMA in both the Feb run and last weeks. All of this occurred on gaining volume and open interest- not supportive of large future gains in the immediate future.

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Market Will Define Near Term Support During Expiration

Daily Continuous

Discussed last week that the trade would help “define” the expiration process this week. The failure of the rally (creating a weekly reversal — see the Weekly section) has assisted in determining the annual weakness surrounding Memorial Day Holiday. Prices on Sunday night do what they do best (create a narrative going into Monday) and have created a small gap in the weekly and daily charts. As mentioned last Monday on the rally — it will be interesting to see if this narrative remains through the day and expiration.

Major Support: $2.883, $2.78, $2.71-$2.70, $2.658, $2.52, $2.422-$2.414
Minor Support:$2.876, $2.694, $2.483, $2.162
Major Resistance: $3.01, $3.12, $3.251, $3.31, $3.396

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No Daily By Email

Daily Continuous

Apologies for no Daily in the email this a.m.– I am not technically trained in computers and had some internet issues while observing a hockey game. Would of been a waste of time as the market is just going to test the low side of the trade range going into expiration week as discussed yesterday.

Major Support: $2.883, $2.78, $2.71-$2.70, $2.658, $2.52, $2.422-$2.414
Minor Support:$2.876, $2.694, $2.483, $2.162
Major Resistance: $3.01, $3.12, $3.251, $3.31, $3.396

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Guess a “New” Range

Daily Continuous

As discussed yesterday that the prices were bound to test the break out area and that they did breaking below the $3.00 area yesterday. Perhaps, a new range is trying to form (basically between $2.90 – $3.10), we will have to wait to watch the action. There are four trade days before the expiration 3-day close and as mentioned, this will set up the expiration and the roll into July. Would expect this is the range to manage price into the close.

Major Support: $2.883, $2.78, $2.71-$2.70, $2.658, $2.52, $2.422-$2.414
Minor Support:$2.876, $2.694, $2.483, $2.162
Major Resistance: $3.12, $3.251, $3.31, $3.396

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Not Surprising

Daily Continuous

Not surprising that after a rally that was provoked by short covering (breaking above the $3.00 level) prices would retrace back to the old resistance area that is now support ($3.00). Thank you to the subscribers that forwarded emails regarding the break above and the expectations going into the July contract as prompt. It will not be a straight action of rising prices onward with the July contract and as discussed yesterday, we need to watch how this sets up for expiration. The retracement to test the support yesterday is very healthy for the market now does it break back below short term support ($3.00) and for how long.

Major Support: $3.001, $2.883, $2.78, $2.71-$2.70, $2.658, $2.52, $2.422-$2.414
Minor Support:$2.876, $2.694, $2.483, $2.162
Major Resistance: $3.12, $3.251, $3.31, $3.396

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