Author: Willis Bennett

Prices acted nearly identical to Monday until the end. Unlike Monday, when there was a rebound off of the stale trade around $2.55, yesterday the market behaved more like I thought it was on Monday, by closing just off the lows and the key support at $2.51. This is the consolidation of the runs during August and it may take prices down into the low $2.40’s during the coming seasonal weakness.

Major Support: $2.51, $2.186, $2.162, $2.089-$2.055, $2.029-$1.937, $1.86, $1.527,
Minor Support: $2.499-$2.468, 2.377, $2.255, $2.102, $1.975
Major Resistance: $2.743-$2.755, $2.809

Expected the decline to support levels but the $2.50 area was minor support (have changed that now), then prices rallied significantly later in the day. Not sure why the late rally, but now prices are challenging that key area where they failed last week (see Weekly analysis). What ever sparked the late day rally — it will need to garner significantly more participants to break through the Island Reversal resistance area.

Major Support: $2.51, $2.186, $2.162, $2.089-$2.055, $2.029-$1.937, $1.86, $1.527,
Minor Support: $$2.621-$2.598, $2.499-$2.468, 2.377, $2.255, $2.102, $1.975
Major Resistance: $2.743-$2.755, $2.809

The price run for the new prompt failed at the key resistance dating back to last Nov. Recall how prices reversed off the high and opened with a small gap (now $2.743-$2.755) and that gap formed the Island Reversal suggesting that prices were headed down. Oddly, that gap was not closed on Friday, in spite of the premium handed to the Oct contract as prompt. This (resistance) should be a key area for prices in the near term as we head into one of the weakest periods of the year for natural gas prices. I would expect prices to retrace into the expiration zone for Sept gas (perhaps a nickel above or below $2.50) during the holiday period short of some fundamental event occurring.

Major Support: $2.186, $2.162, $2.089-$2.055, $2.029-$1.937, $1.86, $1.527,
Minor Support: $$2.621-$2.598, $2.51, $2.499-$2.468, 2.377, $2.255, $2.102, $1.975
Major Resistance: $2.743-$2.755, $2.809

Stronger close than I was expecting, but this market is just running along with little or no serious consolidation periods. Not sure if it will continue, but I am still expecting a period of consolidation taking prices down to $.20-$.30. The upcoming period of the year (Labor Day period) has been one of the weakest of the year historically. Should prices not conform to the period’s history — then it is likely we are headed significantly higher. The gains of the last few days have occurred on lower volume and declining open interest (not surprising with contract expiration) which is not supportive of building a base for extended rallies. Weekly RSI (lagging momentum indicator) is approaching extreme over bought levels and the weekly Bollinger Band study remains nearly 3 standard deviations over the 20 WK SMA (not sustainable over time). Be aware over the next week.

Major Support: $2.162, $2.089-$2.055, $2.029-$1.937, $1.86, $1.527,
Minor Support: $$2.54-$2.51, $2.499-$2.43, 2.377, $2.255, $2.102, $1.975
Major Resistance:$2.588, $2.709, $2.74, $2.809

Flipped the price chart over to the Oct contract for the continuous chart. The declines that were expected are occurring but would expect more to close the premium between the Oct and Sept contracts. Prices will all depend on the situation / positions during the expiration process. The fundamental trade will continue to struggle between the ending inventory levels and the current storage levels (projected forward) that is why I will let the fundamental folks define the technical behavior.

Major Support: $2.162, $2.089-$2.055, $2.029-$1.937, $1.86, $1.527,
Minor Support: $$2.499-$2.43, 2.377, $2.255, $2.102, $1.975, $1.719
Major Resistance:$2.51-$2.54, $2.588, $2.709

Would not expect the quiet day trade of yesterday to continue through expiration. We have options expiration today and then the contract (storage) on Thursday — love it when that happens. Would expect $2.50-$2.60 in play for expiring calls — the put contracts may not get exciting until $2.25. Go back to what I mentioned in the Weekly that the seasonal weakness (week either side of Labor Day) is one of the weakest of the year and if prices don’t go down during this period they are going up.

Major Support: $2.162, $2.089-$2.055, $2.029-$1.937, $1.86, $1.527,
Minor Support: $$2.499-$2.43, 2.377, $2.255, $2.102, $1.975, $1.719
Major Resistance:$2.51-$2.54, $2.588, $2.709

That is why I maintain hedges as prices ignored what the technical data suggested and went opposite, reversing off of early declines to finish higher. Now we are looking at a key struggle, as the market has a influence of The expectation is that prices should weaken this week — but if they don’t I think the weekly section sums it up well.

Major Support: $2.162, $2.089-$2.055, $2.029-$1.937, $1.86, $1.527,
Minor Support: $2.377, $2.255, $2.102, $1.975, $1.719
Major Resistance:$2.43-$2.499

So we discussed yesterday that it looked like the market need to take a breath– hey it did. Last week, at this time, the suggestion was made that perhaps more consolidation should occur– what happen– the market trashed my thoughts with a big move higher. I will submit the same analysis as last Friday, that the move in gas need to continue to test support zones from which to build a base to send prices higher. However, this week there was a slight hedge with some calls– just in case kids want to play.

Major Support: $2.162, $2.089-$2.055, $2.029-$1.937, $1.86, $1.527,
Minor Support: $2.377, $2.255, $2.102, $1.975, $1.719
Major Resistance:$2.43-$2.499