Author: Willis Bennett

Price Gains Do Not Hold Through Week

Weekly Continuous

Price exploded out of the recent range trade last week, primarily fueled by the weather conditions. Breaking above the high end of the range between $3.00-$3.05 only to challenge the highs from last November and then retracing back to the old resistance area at the close. Still, prompt gas finished higher for the seventh time in eight weeks. While closing above the historically important January high- March extended the rally to test its October and November highs. The now soon to expire contract retreated from that resistance but held short – term moving average support and on a closing basis the daily downside reversal highs of 02/05 and 02/11. Prompt gas ended the week only a couple of cents above where it began…3.069 v 3.046, but with increasing volume and open interest. Price, volume and open interest moving in the same direction suggest that the uptrend is sustainable likely to be extended. Further evidence of sustaining this rally is offered by another gain in the coming summer strip that closed nearly a dime higher at 3.050. This is above highest close during October rally. Unless usually March gas gives up a significant share of this week’s gain over its last three trading days, expiration will be above the highest settlements of Q4 (November 2.996, December 2.896).

From a technical perspective, the October high is critical. Failure to trade through that high before a significant decline will not doom the bullish bias trend (discussed here in the past)but will suggest the likelihood of the perhaps long period of a trading range until prompt gas is able confirm another higher low . On the other hand- a low lower than the December low would indicate that a renewed downtrend is in progress.

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New Highs Not Confirmed

Daily Continuation

Last week’s explosion was rejected short of the highs from last November and retreated to the resistance area from where they broke out. As discussed, the rally was suspect as the gains were primarily in the prompt month and the summer differed contracts did not gain near the same pace. Only problem was the summer strip did not capitulate and closed near its highs. March is heading into expiration and the area between $2.90 and $3.10 are likely to bring volatility to trade.

Support:$2.98-$3.05, $2.373–$2.356,$2.255-$2.176
Minor Support: $2.806, $2.71, $2.60-$2.554,$2.483, $2.162
Major Resistance: $3.316-$$3.396, $3.486
Minor Resistance:$3.172

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Initial Collapse

Daily Continuation

Discussed yesterday about the March contract seemed to be “going it alone” in the recent run. As discussed the summer strip was not as enthusiastic for higher prices and remained calmer. Perhaps yesterday’s action confirmed why, as a significant storage number was sold into and after the release. Next week’s number will be higher (according to some who track) and while yesterday’s release put current levels at a deficit to last year next week’s release may show inventories at a deficit to the 5 year average. That is all the fundamental stuff I hear but from a technical standpoint– depending on how tomorrow closes several technical considerations may come into play.

Support:$2.98-$3.05, $2.373–$2.356,$2.255-$2.176
Minor Support: $2.806, $2.71, $2.60-$2.554,$2.483, $2.162
Major Resistance: $3.316-$$3.396, $3.486
Minor Resistance:$3.172

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Gains Continue

Daily Continuous

The March contract exploded higher yesterday and while the summer strip gained, it was at a much smaller pace. March is clearly under the gun as the fundamentals (demand) and the production freeze offs are going to carry prices in the very short term. The question remains, how does the market respond after the temps warm up. BTW look for a big withdrawal this week and next week. Some of my analytical friends (fundamental) tell me that the surplus to the 5 year average and YOY comparisons are likely to become deficits by March.

Support:$2.98-$3.05, $2.373–$2.356,$2.255-$2.176
Minor Support:$3.108, $2.806, $2.71, $2.60-$2.554,$2.483, $2.162
Major Resistance: $3.316-$$3.396, $3.486
Minor Resistance:$3.172

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Range Blows Up

Daily Continuous

That is a trade day– We got the break out above (finally) then had a correction back into the key resistance area ($3.00-$3.05) only to close above the key resistance area ($3.10). Now what happens? The major break out above resistance was not shared by all the summer months, which leads the interpretation that the rally of last couple of days is short lived. Today will hold a near term clue.

Support: $2.373–$2.356,$2.255-$2.176
Minor Support:$2.806, $2.71, $2.60-$2.554,$2.483, $2.162
Major Resistance: $3.108, $3.172, $3.208-$3.214
Minor Resistance:

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Range Is a Range Until It Isn’t

Daily Continuation

Discussed the range and three attempts to close above the top end of the range last week. Yesterday, in light trade, the market traded up to test the high side of the range and then opened above it in the night opening. This is a critical time for the bulls as there is so much bullish news and data points from the fundamental perspective, if prices can’t confirm the light market gains — then there will be a correction. Discussed some of the supporting technical indicators in the Weekly section of the website yesterday– take a look.

Support: $2.373–$2.356,$2.255-$2.176
Minor Support:$2.806, $2.71, $2.60-$2.554,$2.483, $2.162
Major Resistance: $2.98-$3.05, $3.108, $3.172
Minor Resistance:

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Market With Some Changes within Defined Range

Weekly Continuation

Last week’s trade was “inside” the prior week’s range and the nearly identical open and close.  Prices continue above the 10, 20 week SMA, on a closing basis for the last two weeks. Resistance is clearly defined by the high of last week and prior week.  If that resistance is overcome expect a test of three weekly highs March traded between 10/19 and 11/02 (3.318, 3.320 and 3.316). Short of that break out event- expect the range trade to be re-in forced between $2.70-$3.00.

Weekly Continuous with Volume and Open Interest

Starting to see some confirmation of the stronger prices as the total open interest and volume has gained over the last two weeks as prices have risen. Have discussed over the last two months about the bias change (bullish) that commenced after the multi-year low that posted at the end of June. Those discussions have centered around the series of higher high and higher lows. One element that has been lacking was the market confirming the bias change with the volume rising and open interest rising simultaneously. The volume two weeks ago was the highest since last March followed up with a strong volume last week. Both those weeks were met with gains in total open interest. Of greater interest is source of the gains– look at the following two charts– notice that some of the volume gains as prices rallied were associated with short covering by the speculative crowd as prices showed strength two weeks ago.

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Almost Perfect

Daily Continuous

I know it has happened, I just can’t remember when the market has provided such perfect ranges to trade. Granted, you would of had to been up early in the mornings or late at night to trade the extremes of the recent $.30 range this month, but the first two weeks of February has provided a nice stream of revenue from the range. Spoke yesterday about the market seeking to run back up above $3 entering the high end of the range. The question was would it stay up or decline back the way it has twice before this month. Clearly, this was a low risk selling opportunity (stops just a nickel away) but the problem was it hit above $3.00 early in the morning. I am not a big fan of placing orders in over night- so when the market was starting to retreat, I was a little late to the dance. This is the third time the range has been defined this month, no clue how many more times will get the chance to “play it again Sam”, but I will be waiting for the fourth.

Support: $2.373–$2.356,$2.255-$2.176
Minor Support:$2.806, $2.71, $2.60-$2.554,$2.483, $2.162
Major Resistance: $2.92-$2.997, $2.98-$3.05, $3.108
Minor Resistance:

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Is Another Challenge Developing

Daily Continuation

Was beginning to wonder if the market was suffering from “buy the rumor sell the fact” as prices could not gain any traction. Yesterday, and early trade today has confirmed that the cold weather patterns will have an impact on demand. Now the question remains does the fundamental data points have the strength to trade above and CLOSE above major resistance between $3.00 and $3.05. If we get the same decline at resistance on the close that we witnessed twice before then nothing has changed and the market remains range bound near term. Otherwise it gets interesting.

Support: $2.373–$2.356,$2.255-$2.176
Minor Support:$2.806, $2.71, $2.60-$2.554,$2.483, $2.162
Major Resistance: $2.92-$2.997, $2.98-$3.05, $3.108
Minor Resistance:

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Consolidation Continues

Prices traded down slightly in the face of the cold out break coming — which does elicit the comment “if prices don’t go up when the indicators say they should — then they are headed down”. To early to tell with this set up but the fundamental inputs shout for higher prices but perhaps these cries were why we are at the levels now. Time will tell– but the current demand profiles will likely eliminate the surplus of storage in the coming weeks which will force prices to establish a new or the same range for the upcoming spring.

Support: $2.373–$2.356,$2.255-$2.176
Minor Support:$2.806, $2.71, $2.60-$2.554,$2.483, $2.162
Major Resistance: $2.92-$2.997, $2.98-$3.05,
Minor Resistance:

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