Author: Willis Bennett

Churn, Churn to the Downside

Daily Continuous

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

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

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

Weekly Continuous

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).

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

No Surprise

Daily Continuous

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

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

Folks Know About Storage Adjustment

Daily Continuous

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

Daily Continuous

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

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

All Systems Go

Daily Continuous

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

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

Lots Happening

Weekly Continuous

Wow — that’s Natural Gas. The breakout last Friday brought back memories of when Natural was a brutally volatile commodity. Eliminating serious resistance zones ($3.198, $3.25,and $3.329) without blinking and testing the yearly highs with a range of $.181. However, perhaps the market got a little too exuberant when it tried to take out the Jan high of $3.329 (it traded just $.001 above) or the late Oct/Nov high of $3.396, before retracing the gains but still closing the week at the highest weekly close since that late Oct rally.

All of that action, left prices over the 2 standard deviation band above the 20 week moving average (chart below) and had prices hitting the extreme zone of the daily RSI chart and approaching the extreme zone in Weekly chart (see Daily further below).

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

Over-Bought But Will It Extend

Daily Continuous

That is a breakout as prices ran through resistance with huge volume and gaining open interest. Prices are now a little over-cooked but that may not stop additional gains, however, they will have to consolidate the breakout before moving on. Mentioned significant areas in the Weekly area and some analytics behind last Friday’s explosion. The key for the next couple of days is the late Oct highs at $2.39, mentioning in the Weekly that if prices do not garner the support to break that high — then expect some consolidation.

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

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

Slight Extension Higher Followed by Retreat

Daily Continuous

Prices were gaining some momentum and then the storage release brought the house down with prices retreating to yesterday’s close. It remains a bullish trend (discussed since last fall) and mentioned yesterday about the nature of the gains in a bull market. This run is not based on sudden short covering, as open interest has gained this week on the higher volume, clearly supporting the market internals. This week’s extension strongly suggest that dips in natural gas should be buying opportunities.

Major Support: $3.00 $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: $3.12-$3.15, $3.198, $3.251, $3.31, $3.396