Author: Willis Bennett

Expiration and Unknowns

Weekly Continuous

Last week prices trade through the resistance that limited the upper boundary of the recent short term trade and closed above it. While this type of event usually has supportive technical implications, the market internals (volume and open interest) did not, but it should be noted that the daily outside reversal on Thursday did occur on above average volume. This is all very short term interpretations and doe not alter the medium and longer term analysis that this web site has provided over the last few week. It is not uncommon for prompt gas to return to test the validity of “new” support (or resistance) once violated becomes support. Perhaps we will witness that type of action this week as the market heads into expiration.

Several positive technical aspects occurred in last week’s trade–prompt gas closed above the upper boundary of the recent range that has held action with the highest weekly continuation close since late Feb (2.854) and above the 10 Week SMA for the first time since that same week. Unfortunately, the second straight weekly gain came with decreased volume (this week average daily volume fell by an roughly 15,000 contracts while total open interest fell for the third straight week.  Look at the chart below:

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A Little Volatility

Daily Continuous

The storage report supplied some juice to the trade as we got a $.122 range in volatility yesterday. Guesses are that surprised some of the fundamental trade folks. Volume was slightly higher but nothing significant– so now the market is signalling more gains (not sure what data point will drive it) and we will have to watch where this rally subsides as it will likely be the initial resistance for the next month as well.

Support: $2.52, $2.422-$2.414, $2.373–$2.356,$2.255-$2.176
Minor Support: $2.694, $2.483, $2.162
Major Resistance: $2.713-$2.72, $2.74-$2.789, $2.89, $2.98-$3.05,
Minor Resistance:$2.806

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Breakout Holds — Consolidation on A Dime Move?

Daily Continuous

I could not resist one of my readers sarcastically mentioned that the run looked like it was consolidating the gains from Monday – needless to say I kept the chuckle between us. One other client mentioned that the market looked tired (again I took it as sarcasm) – really?– its been doing nothing but range trading between $2.69 and $2.50 for over a week– if that tires a market out then traders should seek a new job. What can be said about this market is it seems to seeking a “new mini-range” all within the greater range from last fall and will likely define the key resistance in short order (my bet on Thursday). This form of quiet time in natty is a great time to sell premium.

Support: $2.52, $2.422-$2.414, $2.373–$2.356,$2.255-$2.176
Minor Support: $2.694, $2.483, $2.162
Major Resistance: $2.713-$2.72, $2.74-$2.789, $2.89, $2.98-$3.05,
Minor Resistance:$2.806

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Breakout Yes — Volatility No

Daily Continuous

Was expecting more volatility (perhaps light short covering) on a break above $2.72– little occurred. The total volume was slightly less than last Friday — indicating continued complacency in the nat gas world. Keep in mind that according to the CFTC data the large chunk of short positions occurred as prices declined off of the $3.00 area in Feb, so perhaps the folks aren’t squirming yet. Would look to play this little rally for a day or two more, but expect the market to correct a little as it has a series of higher daily closes.

Support: $2.52, $2.422-$2.414, $2.373–$2.356,$2.255-$2.176
Minor Support: $2.694, $2.483, $2.162
Major Resistance: $2.713-$2.72, $2.74-$2.789, $2.89, $2.98-$3.05,
Minor Resistance:$2.806

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Time to Break Above?

Daily Continuous

Once again the market is making a subtle alert to its longer term intentions by closing near the highs last week and opening stronger on Sunday night. Call me a cynic, but I will wait for confirmation today with a close above this key area that has held resistance for several weeks. Not to say it may be a break out as discussed in the Weekly area on the website — but on a daily basis — need some proof of strength.

Support: $2.422-$2.414, $2.373–$2.356,$2.255-$2.176
Minor Support: $2.483, $2.162
Major Resistance: $2.713-$2.72, $2.74-$2.789, $2.89, $2.98-$3.05,
Minor Resistance:$2.806

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Why Not Gas?

Weekly Continuous

As many of you know already– commodity markets have been on a tear for 2021, many since last July. Copper, gold (though not of late), corn, soybeans the list goes on. Many pundits have referred to as a super-cycle in the commodity trade. Yet with all this bullishness, gas has not been able to hold onto the gains made late last year and have constantly retraced. Grant you prices are higher this year but it does not seem as strong as most of the other commodities. This website has discussed several times last fall and winter the “bias change” that was occurring in the gas market and with all the discussion about the super-cycle, it is time to update the charts.

Weekly Continuations with Highs and Lows

Notice in the charts, the multi-year low late last June (interesting timing with the commencement of the other commodity rallies), the market has set a series of higher highs and higher lows. The one exception was this February when prices could not exceed the previous high from Nov by a few pennies. Other than that– the gas market has maintained a significant premium to the June ’20 lows. This activity may represent the development of a more bullish environment for gas in 2021.

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Almost

Daily Continuous

The volatility after the release caught some shorts off-guard but prices could not pierce the resistance of recent movements at $2.70. Is there enough to garner a break or not. Also that area as a great area for shorts with some tight stops just above. Play as you see fit.

Support: $2.422-$2.414, $2.373–$2.356,$2.255-$2.176
Minor Support: $2.483, $2.162
Major Resistance: $2.713-$2.72, $2.74-$2.789, $2.89, $2.98-$3.05,
Minor Resistance:$2.806

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Thrust Higher Only to End Lower

Daily Continuous

Prices opened and rocked higher only to give up all the gains by the day’s end. Hoping some volatility and directional bias occurs on the storage release today but not holding my breath. Natural gas is likely to stay in the range from $2.80-$2.40 for the next month or so– I would like to see a rally up to $2.80 in order to potentially flush some shorts.

Support: $2.422-$2.414, $2.373–$2.356,$2.255-$2.176
Minor Support: $2.483, $2.162
Major Resistance: $2.74-$2.789, $2.89, $2.98-$3.05,
Minor Resistance:$2.806

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Is This a Break Out?

Daily Continuous

After complaining about the lack of directional bias in trade of late, the price action yesterday provided a slight directional bias. Trade still remains within the range and this move can easily be defined as a test of the range resistance. Prices will need to break (closing basis) above resistance to formulate the next move.

Support: $2.422-$2.414, $2.373–$2.356,$2.255-$2.176
Minor Support: $2.483, $2.162
Major Resistance: $2.74-$2.789, $2.89, $2.98-$3.05,
Minor Resistance:$2.806

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Nothing Yet

Daily Continuous

Each day I come in and open my charts hoping to find some directional bias to the market– maybe a break out or break down — don’t care but what is the genre — another tight range trade day with no volatility. The problem is exacerbated because crude is behaving similarly– those are the two favorite commodities for me to trade. Guess corn will be calling.

Support: $2.422-$2.414, $2.373–$2.356,$2.255-$2.176
Minor Support: $2.483, $2.162
Major Resistance: $2.74-$2.789, $2.89, $2.98-$3.05,
Minor Resistance:$2.806

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