Author: Willis Bennett

Something May Be Amiss

Daily Continuous

This trade activity is starting to “tweek” me a little. Expected the reaction to IDA on Monday but without a significant amount of new information in the market, yesterday’s rally caught me off-guard. I learned a long time ago that when markets don’t behave like they should something is amiss. A market that gets bearish news on demand (natural gas) and goes up– sends a signal. Not sure what exactly is going on but discussed in the Weekly section, my thoughts on the potential market behavior.

Major Support: $4.211, $4.156, $3.92, $3.821, $3.722, $3.58, $3.538-$3.511, $3.385, $3.368-$3.316,
Minor Resistance: $4.508-$4.485,
Major Resistance: $4.532, $4.66

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Slight Declines as IDA Moves Northeast

Daily Continuous

Price rally suffered slight break down to the close from the last Thursday’s rally off of the storage report. That initial test of support was a likely spot for prices to find. Now we start to evaluate the actual damage and power loss from the storm, which will likely keep prices volatile for the next couple of days.

Major Support: $4.211, $4.156, $3.92, $3.821, $3.722, $3.58, $3.538-$3.511, $3.385, $3.368-$3.316,
Minor Resistance: $4.508-$4.485,
Major Resistance: $4.532, $4.66

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Does the Market Sell the News?

Daily Continuous

This is a dangerous period for the market — Last weeks strong gains were tied to IDA and the expectations associated with it. Now we get the actual news of damage, combined with LNG restrictions and demand destruction. Prices open last night expanding to a new high, but this move was prior to any knowledge of the actual events associated from the storm. If buying looking for additional gains- keep stops tight as the elevator may decline swiftly. If selling looking for a correction, there are not numerous areas for support until you find the storage report lows (last Thursday) after the report was released. That event started this move higher (some might call it parabolic).

Major Support: $4.211, $4.156, $3.92, $3.821, $3.722, $3.58, $3.538-$3.511, $3.385, $3.368-$3.316,
Minor Resistance: $4.508-$4.485,
Major Resistance: $4.532, $4.66

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Risky Week With IDA

Weekly Continuation

Last week brought the highest volume traded during its tenure as prompt as September became the sixth straight contract month to rally into expiration- the trend continues. Some fun facts — from low to high expiring September traded a range of $.559 which was the widest weekly range not including an expiration gap since the volatile decline following the Q4 ’18 high. With the expanded range (and volume) traded during the expiring prompts final two days September first extended the rally from the March ’21 low to a new high ($4.217 vs $4.205) and to a new high daily close ($4.184 vs $4.158 on 08/04) and then to the highest settlement since December ’18 that went off the board at 4.715.

Discussed during early August, when September contract first traded to $4.205, market internals did not support a higher high.  Volume and open interest were both lower than they had been five weeks before on a rally.  Those divergences strongly suggested that although the intermediate and long – term trends were higher the rally was on shaky ground and need a consolidation period (or a correction) was due.  September achieved that goal by dropping $.471 (+11%) over the next few trading days, closing higher only three times.  While expectations were for further declines were issued here as the reversal day low and weak close on Friday (week ago), are not the actions setting up the brutal blow out to the upside experienced last week.

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Stunning

Daily Continuous

That was just stunning as prices jumped back up to the highs of the month as options expired. Have no idea what the reasons (Gulf storms destroy demand) were and its rather irrelevant as prices are what they are. Needless to say, the rallies into expiration continues the trend this month and prices are not over bought, so additional gains could be made. Volume, yesterday, exploded and there was a period of consolidation (not as low as expected) previously, therefore this may be the initial run towards the Q4 run.

Major Support: $3.92, $3.821, $3.722, $3.58, $3.538-$3.511, $3.385, $3.368-$3.316, $3.198,
Minor Support: $3.508-$3.485
Major Resistance: $4.187, $4.205, $4.238, $4.266, $4.532

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Going to Rally Into Expiration Huh!

Daily Continuous

Was expecting slight retracement in prices to set up a rally into expiration as the market has done over the last few months (see Weekly), but this action looks like it wants to stay strong up and into expiration. This may be related to options that expire today– we will have to wait until the expiration occurs. I was interested that the market went up to just short of the $4.00 area (perhaps seeking option traders) before they melted down toward the close.

Major Support: $3.821, $3.722, $3.58, $3.538-$3.511, $3.385, $3.368-$3.316, $3.198,
Minor Support: $3.508-$3.485
Major Resistance: $3.968, $4.187, $4.205, $4.238

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Not Exactly the Decline to Set Up For Strong Expiration

Daily Continuous

That was not exactly what I was looking for. Perhaps, I am no the only trader on the block who has noticed and circled the recent strength of the expiration’s of late (defined in the Weekly section) as the market seemed poised for a test of support only to find early buyers. There will likely be additional declines, whether it is with the Sept or Oct contract remains to be seen.

Major Support: $3.821, $3.722, $3.58, $3.538-$3.511, $3.385, $3.368-$3.316, $3.198,
Minor Support: $3.508-$3.485
Major Resistance: $3.968, $4.187, $4.205, $4.238

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Is It Going to Rhyme?

Daily Continuous

Price action seems to be following a similar pattern to last week with early Monday rally, holding prices near the high end of the range. Last week they stopped on Tuesday and Wednesday set up the low support challenge. Would not discount the trade history mentioned in the Weekly section, but perhaps a strong rally into expiration off of a retracement back to the low $3.70’s would keep the historical trend in place. Over all — still in the range between $3.72-$3.98– continue to play it.

Major Support: $3.821, $3.722, $3.58, $3.538-$3.511, $3.385, $3.368-$3.316, $3.198,
Minor Support: $3.508-$3.485
Major Resistance: $3.968, $4.187, $4.205, $4.238

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Likely Be an Eventful Week Coming

Daily Continuation

Discussed the recent history of expiration’s in the few month in the Weekly section — so enjoy the read. Trade last week provided great opportunities at support and then the failure at resistance all taking prices back to where they started. Similar action should be expected this week– perhaps inside last weeks range. Don’t see a major breakdown or breakout coming in the next 5 days — but you never know.

Major Support: $3.821, $3.722, $3.58, $3.538-$3.511, $3.385, $3.368-$3.316, $3.198,
Minor Support: $3.508-$3.485
Major Resistance: $3.968, $4.187, $4.205, $4.238

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Strong Lower Lows

Weekly Continuous

Prices traded down to interim support before garnering the strength to form a nice rally. Support from declines were found by the lower closing low suggested that significant support presented by the continuation 50 – day SMA and the trend line rising from lows traded in late May and late June. As noted last week this was the initial area for prices to be tested.

A mild warning here, in addition to that reasonably formidable technical support being tested and rallying –the last five expiring contract months have shown a consistent tendency of rallying during the final week of their tenure. Historical analysis continues to indicate that prompt gas…whether it is September or October, is vulnerable to more significant decline but given the tendency to rally into expiration…every month since and including February except March has (Feb closed higher each of its last three days, April three of the last four, May four of the last five, June two of the last three, July each of its last five and August eight of its last nine), it seemed prudent to alert traders of that trend that they have forgotten.

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