Author: Willis Bennett

Looks Like Lower We Go

Weekly Continuous

The rally to the February high confirmed intermediate – long term resistance. This zone remains between the October high, 3.396, the November high,3.393 and the February high, 3.316. Prompt gas now needs to define (or redefine), support as discussed in the Daily for the last two weeks. Obvious conventional support is the zone between the December and January lows (2.238 – 2.414), but above that is the trend line rising from the June and September lows and the 40 – week SMA. The coming week’s value of that trend line is 2.493 (on a monthly chart basis the value of the trend line is 2.521).

Monthly Continuous

It should also come to your attention, that the speculative interests have once again entered the market on the declines of the last week or so. Notice in the chart below, that after remaining dormant or reducing for the last couple of weeks — they have increased positions with the recent breakdown.

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Gas Storage – Does Nothing to Prices

Daily Continuous

Thought that the storage release my bring some volatility to the market – but a $.065 range in the first twenty minutes (never challenged after) seems weak. The range stays in place for now and would not expect any major break down or break out.

Support:$2.65, $2.554, $2.446, $2.373–$2.356,$2.255-$2.176
Minor Support: $2.60, $2.162
Major Resistance:$2.887, $2.94, $2.98-$3.05, $3.082, $3.316-$$3.396, $3.486
Minor Resistance:$2.724-$2.755, $2.85

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Near Term Support Holds

Daily Continuous

The market provided three tries to break into $2.50’s and failed. Yesterday, it garnered some interest in seeking the high side of the range. Did not hear of any fundamental reason for the gain so I will leave the analysis to if support holds — time to check resistance. Not sure how aggressive this run will be on the heels of the storage report (which has now lost relevance) but may proved some volume for the contract.

Support: $2.61, $2.54, $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

Exciting Day Went Nowhere

Daily Continuous

Not much to say about yesterday — but boring. We may be headed into some additional days of boredom as the fundamental issues are waning as folks are well aware of ending storage — etc.. From a trade perspective near term support has been defined (last two day lows) so now where does it go?

Support: $2.65, $2.554, $2.446, $2.373–$2.356,$2.255-$2.176
Minor Support: $2.60, $2.162
Major Resistance:$2.887, $2.94, $2.98-$3.05, $3.082, $3.316-$$3.396, $3.486
Minor Resistance:$2.724-$2.755, $2.85

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Solid Decline Not to the $2.50’s Though

Daily Continuous

Prices extended the recent declines down to some of the support zones from the previous month. If you believe the range trade environment then this is a low risk buying area with stops just below in the $2.50’s — your risk level. Most folks know that the fundamentals are well defined for the next month and expectations of storage levels are being developed as you read. Not sure it would be wise to short this market as the opportunity for gains is somewhat limited unless you believe major support is the target.

Support: $2.693-$2.65, $2.554, $2.446, $2.373–$2.356,$2.255-$2.176
Minor Support: $2.60, $2.162
Major Resistance:$2.887, $2.94, $2.98-$3.05, $3.082, $3.316-$$3.396, $3.486
Minor Resistance:$2.724, $2.85

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Second Week of Weakness

Weekly Continuous

Have discussed in the Daily about the market wanting to test and eventually define the low end of the range trade that will develop (it has for the last few months). Last week was a start to develop a low — not sure it is over as technical points to further declines. Prices have now set two consecutive weeks of lower closes which is bearish but the declines of those weeks have occurred on much lower volume and declining open interest. Looking at the chart below — significant volume and open interest characteristics in this weekly continuation chart shows the volume spike that accompanied trade through the December – January highs, but perhaps more important the change in open interest. Total open interest had steadily declined since early November (nine of ten weeks) but then increased for three straight as prompt gas rallied. Increasing average daily volume and open interest along with price is a substantial technical positive. During the price weakness of the last two weeks both declined.

Weekly Natural Gas with Volume and Total Open Interest

Of additional input is the changes as to what group has been selling into the recent declines- It should also be noted that the producer community has awakened to the capacity of hedging future prices. The chart below identifies the level of selling forward production as reported to the CFTC.

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2nd Lower Weekly Close

Daily Continuous

The market seems to be wanting to define a low to, what is likely, the new range and two daily tests of $2.69 and just below. Early trade on Sunday night does not indicate any early preference. The declines last week stopped at support from the 200 day SMA of the April contract (see below).

Spot April Contract

This week will likely provide indication whether this is serious support zone and the lower end of the range.

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Lower End of Range Tested

Daily Continuous

Was hoping that the lower end of the developing trading range for March would be defined more dramatically than what transpired. Clearly, prices will be supported as the decline under $2.70 — but there is not a significant support areas from the $2.68 of yesterday all the way down to $2.54. Therefore the range is $2.68-$2.89 for now. What happened last month was a rare occurrence and looking for a repeat is not wise.

Support: $2.74, $2.65, $2.54, $2.373–$2.356,$2.255-$2.176
Minor Support: $2.71, $2.60-$2.554,$2.483, $2.162
Major Resistance: $2.94, $2.98-$3.05, $3.082, $3.316-$$3.396, $3.486
Minor Resistance:$2.85

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Tardy and Range

Daily Continuous

Yesterday turned out to be a good day to suffer a stomach issue as the market just churned lower and now this morning seems to be looking to set the low end of the range. My apologies for not emailing the Daily and the tardy post, but I am still not in my game plan.

Support:$2.764, $2.74, $2.65, $2.373–$2.356,$2.255-$2.176
Minor Support: $2.71, $2.60-$2.554,$2.483, $2.162
Major Resistance: $2.94, $2.98-$3.05, $3.082, $3.316-$$3.396, $3.486
Minor Resistance:$2.85

Patience is Required

Daily Continuous

Well that was a brief extension upwards, but the declines on Sunday/Monday down to $2.70 need to be re-confirmed. Thought yesterday may bring that but so much for my thoughts. This area needs to be traded cautiously as no defined floor has been established but many areas of resistance ($2.92-$3.00) are evident. Sometimes it is prudent to sit back and wait for the market to paint the picture.

Support:$2.764, $2.74, $2.65, $2.373–$2.356,$2.255-$2.176
Minor Support: $2.71, $2.60-$2.554,$2.483, $2.162
Major Resistance: $2.94, $2.98-$3.05, $3.082, $3.316-$$3.396, $3.486
Minor Resistance:$2.85

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