Author: Willis Bennett

Holiday Trade Coming, Likely Light and Volatile

Daily Continuous

As discussed in the Weekly area, prices continue to use the 20 week SMA as the near term support zone ($2.636 this week) and it is likely that the lows for the Jan contract have been established. Most folks trade on weather forecasts, which I have no clue of, so establish positions at the extremes of support and resistance.

Support: $2.636, $2.425,$2.373, $2.255-$2.176
Minor Support: $2.596, $2.162
Major Resistance: $$2.74-$2.789, $2.98-$3.05,
Minor Resistance: $2.798

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Chop In the 60’s

Daily Continuous

Not much to say except that prices are chopping around between $2.60 and $2.70. Is this a consolidation pattern that will lead to a break out or break down? You tell me! Last week had big volume on the declines and rebound with open interest loosing ground– I am as confused as the market is. Two weeks ago I wrote about all the comments I hear about the winter being “over” and the seasonal high is in– OK — why is it so stubborn to give up the ghost and land below $2.50? If you are long keep the stops in place (the 20 Week or last weeks close) if you are short your key is this week’s high.

Support: $2.425,$2.373, $2.255-$2.176
Minor Support: $2.596, $2.162
Major Resistance: $$2.74-$2.789, $2.98-$3.05,
Minor Resistance: $2.649, $2.798

Small Breakout Above Initial Resistance

Daily Continuous

Prices went out on the bid yesterday as prices got a boost in the late morning and held through the daily close. Perhaps, some of the strength was due to the big storm on the east coast, I will interpret the behavior as a probe building off of the recent gains. Unless the market has a “knee jerk” reaction that sends prices dramatically higher due to short covering, bullish trends begin with a series of slight gains. Now it will be important to see how the market reacts to the next storage stimulus.

Support: $2.425,$2.373, $2.255-$2.176
Minor Support: $2.596, $2.162
Major Resistance: $$2.74-$2.789, $2.98-$3.05,
Minor Resistance: $2.798

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Range Looking for the Next Bias

Daily Continuous

Very similar range to Monday as the market is waiting for new directional bias. It will likely come from weather forecasts and how the storage withdrawals match (or not) expectations. For now, barring any dramatic change, buy the dips around $2.60 and sell the respected (two days) resistance at $2.70.

Support: $2.425,$2.373, $2.255-$2.176
Minor Support: $2.596, $2.162
Major Resistance: $$2.74-$2.789, $2.98-$3.05,
Minor Resistance: $2.649, $2.798

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Gains on the Open

Daily Continuous

Prices opened Sunday night at $2.658 and the trade throughout the day stayed within a small range. The action did manage to close the gap that was created from the Friday high to yesterdays low. After closing the gap prices immediately reversed higher to finish the day with a nine penny gain. Not sure how much of yesterday’s gains were do to short covering from late / weak short positions, as the data has not been released, looking at the action- I would be hesitant to call it short covering. This looks like a small rally (four consecutive higher highs) not sure why but the market is saying it will go higher until it does not.

Support: $2.425,$2.373, $2.255-$2.176
Minor Support: $2.162
Major Resistance: $$2.74-$2.789, $2.98-$3.05,
Minor Resistance: $2.649, $2.798

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Support Challenged — Declines Failed

Weekly Continuation

Hope the bears got to read last week’s article on early winters—Prices took to the declines and worked lower during last week. It was interesting that the test below 2.40 was followed by a reversal higher on increasing volume…and extension of the gain to a higher weekly close.  That reversal back through the 20 – week (chart above) with the highest weekly volume since week early August, is a strong indication that January has traded its low before expiration.  With that in mind, the enormous amount of technical damage in the charts…including a monthly reversal on the January chart, violation of the low of a rare inside month in November and more than a dollar decline from the failed first trading day of November test of the October high suggests that the January contract will by having a difficult time gaining back any of the recent losses.  

Monthly Continuous

Support: $2.425,$2.373, $2.255-$2.176
Minor Support: $2.162
Major Resistance: $$2.74-$2.789, $2.98-$3.05,
Minor Resistance: $2.649, $2.798

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Weekly Closes Firm

Daily Continuous

The action last week finished firm with prices closing the week at the highest close since Dec 2nd. Went into expiration expectations, later in the month, in the long term section but would look for further gains this week. The CFTC data showed speculative shorts increased positions by a significant margin in positions reported effective last Tuesday. This could provide the fuel for a significant rally on little fundamental information sometime in the future. Until that proves itself the range between $2.80-$2.40 should be the support and resistance.

Support: $2.425,$2.373, $2.255-$2.176
Minor Support: $2.162
Major Resistance: $$2.74-$2.789, $2.98-$3.05,
Minor Resistance: $2.649, $2.798

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Slight Break Above Resistance

Daily Continuous

The storage report came in above expectations (I guess) as prices took off after the publication. From my perspective the counter rally was to be expected at some point as prices have had quite a negative correction of late. While yesterday’s action contained some short covering based upon the storage data– now the question is how much more short covering will occur if prices continue to rally. On the downside the $2.38 area has proven itself quite powerful.

Finished the analysis on the winter price history over the last 5 years on the long term section.

Support: $2.425,$2.373, $2.255-$2.176
Minor Support: $2.162
Major Resistance: $$2.74-$2.789, $2.98-$3.05,
Minor Resistance: $2.55, $2.649, $2.798

Those Early Winter Calls for the “End of Winter”

Weekly Continuation Chart

Started the research going back to 2010 but really figured that few of us remember trading the commodity that far back (unfortunately I do). So I limited the study to the recent history and found the necessary data to properly warn you. This is not to make a prognostication of future events but rather a response to a few of you who have contacted me that the “winter is over” and seasonal trends complete. I find your comments proof that none of us has a clue where prices are going for they haven’t proved accurate in the past.

Take a look at the chart above– each of the blue highlighted circles represent an early winter low as the market was under the cacophony of bearish claims highlighting the status of winter. Notice the reversals off of the lows– each over 30%. In 2015, prices bottomed at $1.68 only to reverse and trade up to $2.49 (over 47% increase). In 2016, the price low was $2.546 and the reversal took prices up to $3.994 (57% increase). In 2017, declines stopped at $2.568 and reversed upward to $3.34 (30% increase). Not sure how much you folks want to risk but history has proven, it can be quite expensive for audacious calls based on “weather”. Should the lowest historical increase occur – prices would run up to over $3.00. Should the highest historical increase occur – prices would eclipse $3.70.

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Not Much to Add

Daily Continuous

Not a lot of change in the trade yesterday from what I discussed this morning. Mini range waiting on new news or another shoe. This gap is developing as a key support zone due to the fact it opens up further declines as discussed. A breakdown may also break the bullish bias (long term discussed here for two weeks) the market has maintained if it is extended far enough. From my fundamental folks, I am not sure how much warmer the temps can get so any adjustment in the forecasts may bring light panic to the bears. Speaking of which, I took a first look at the “winter is over” idea and remembered 2015, 2016, and 2017 on the charts. I will break down the results in the long term section during the day tomorrow.

Support: $2.425,$2.373, $2.255-$2.176
Minor Support: $2.162
Major Resistance: $$2.74-$2.789, $2.98-$3.05,
Minor Resistance: $2.55, $2.649, $2.798

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