Author: Willis Bennett

Another Weak Weekly Close

Weekly Continuous

Some interesting developments in the trade this spring. 1) as a contract expires there is a substantial premium afforded to the upcoming prompt. This premiums sets the stage for a high before the weakness and selling smacks the prompt back into the range (discussed here and the Daily) that has held the market for months. 2) declines have taken the market into range and has created a complacency to the trade (note the Bollinger Band study below).

2 Standard Deviation around the 20 Week SMA — Bollinger Study

When this complacency (lack of volatility) occurs in the market- I is not likely to last for very long and creates an environment inducing potential volatility. The difference between the high 2 standard deviation band the lower band is under $.37. It is unlikely that this will hold for very long and the markets premium afforded to the upcoming months and winter will all pressure a resolution to the complacency. Should prices break down and the premiums afforded to the differed contracts come down- the lower band will be broken ($1.579 this week) and volatility is likely to increase. Should prices break above the high band ($1.945 currently), this will likely add significant volatility. Prices have not brought any indications of which scenario will occur — hence the complacency.

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Friday Weakness

Daily Continuous

Go into the trends of late regarding the market’s frequent selling on Friday’s in the Web so I will not dive into it here. Instead, the markets ability to range trade with no breakout or breakdown for an extended period of time. Some would call this complacency which scares this trader. The price action has given no clue to the upcoming directional bias when prices break the complacency — but up or down the rewards could be great. Break downs and the selling would take the winter down significantly from its lofty premium to the prompt prices. Break outs above will find prolific short covering and take prices in the summer/fall prompt to chase the prolific premiums in the winter. Either way — hello volatility.

Major Support: $1.611-$1.59, $1.555-$1.519
Minor Support: $1.705-$1.649
Major Resistance: $1.90, $1.974, $2.019- $2.029
Minor Resistance: $1.864-$1.896

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What Are These Reversals All About

Daily Continuous

Mentioned yesterday that at the open on Tuesday afternoon some folks sold out of positions on added to positions on the open that sent the price to $1.674 before buyers showed up. From there prices reversed again during the day, shoeing gains. Truly confused, as to the directional bias its anyone’s guess. Middle of the recent rage, radical daily trade and no established bias, hang tough. Today we get some fundamental data that may indicate some bias but in this market — play the patient range.

Major Support: $1.611-$1.59, $1.555-$1.519
Minor Support: $1.705-$1.649
Major Resistance: $1.90, $1.974, $2.019- $2.029
Minor Resistance: $1.864-$1.896

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Sudden Early Declines Late Tuesday

Daily Continuous

Not sure what news hit the market when it re-opened yesterday at 6 p.m. EDT – but it sent prices through support and created a lower low this week only to rebound at the time of this writing. Either somebody had to get out of length (immediately- say margin call) or somebody is trying to play with prices, which I remember back 15-20 years ago, by trying to influence a trend when participation was light. Regardless, it is still trading in the recent range– so play accordingly.

Major Support: $1.611-$1.59, $1.555-$1.519
Minor Support: $1.705-$1.649
Major Resistance: $1.90, $1.974, $2.019- $2.029
Minor Resistance: $1.864-$1.896

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Another Reversal ????

Daily Continuous

As discussed in yesterday’s Call, the market extended the declines from last week only to find buyers that propelled another reversal. It seems to be evident that declines in the July contract will find buyers at consistent levels. My expectations were for the prompt to trade below the lows of last week and was alarmed when the rally occurred. What does it mean– the range is intact and the market is unable to break below or above. Look at the upcoming convergence of the trend lines– something is bound to happen.

Major Support: $1.611-$1.59, $1.555-$1.519
Minor Support: $1.705-$1.649
Major Resistance: $1.90, $1.974, $2.019- $2.029
Minor Resistance: $1.864-$1.896

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Last Week’s Weakness Should Extend

Daily Continuous

Closing the week below the trend line from the May lows, suggest that trade will be opening the week lower when trade resumes. this week. …but also note the 50 – day SMA just below), that prompt gas will be offered lower when trading resumes likely testing and breaking the 50 day SMA. There is significant definable continuation support below the 50 day and the seasonal tendencies during the second and third weeks of June (see Website Longer term) suggests that weakness is likely to be limited. Loosing a dime would keep prices in the same recent range.

Major Support: $1.611-$1.59, $1.555-$1.519
Minor Support: $1.705-$1.649
Major Resistance: $1.90, $1.974, $2.019- $2.029
Minor Resistance: $1.864-$1.896

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Prompt July Breaks Down

Weekly Continuation
Spot July Contract

Trade in the July prompt contract last week broke down and through the previous lows established in March, similar to the action in the May and June contracts when they became prompt. Last week’s breakdown was immediately supported back up to previous resistance at $1.86 before decline into the weekly close. The July trade is met with weakness early as the prompt month (usually either side of Memorial Day) consolidates finding its footing for a rally in the middle of the month (usually between the 14th and 20th), but rarely extends it’s mid – June rally into expiration (the last time was in ‘16 before that in ‘12). 

While the prompt is showing weakness, the continuation of prices remains in the recent range between $1.70 and $1.90 and last week stayed within the high and lows of the previous week. It did break below the trend line from the May daily lows, which suggests additional declines early this week (see Daily). Monthly volume declined in May for the second straight month, suggesting a lack of enthusiasm for dramatic lower prices. The lack of volatility is beginning catch my attention but remains neutral.

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Quiet Consolidation Continues

Daily Continuation

Another quiet day with the range staying with in he previous day’s range as the market continues to consolidate. With tomorrow being the end of week, don’t expect any major moves. Seems like the bias is going to shift based upon production (LNG export) news or the forecasts for summer so this could become very interesting as we head into late June. Still near the middle of the long term range (for three months) play accordingly.

Major Support: $1.611-$1.59, $1.555-$1.519
Minor Support: $1.705-$1.649
Major Resistance: $1.90, $1.974, $2.019- $2.029
Minor Resistance: $1.864-$1.896

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Brief Rally

Daily Continuous

Another low volatility day with tight range and a slight increase in price. Does not look like the market is dedicated to a directional bias and is comfortable in the range that has held for three months. Wish there was some technical indicator that would give us a clue but all I can see is what I have discussed in the long term section of the web site for the last four weeks.

Major Support: $1.611-$1.59, $1.555-$1.519
Minor Support: $1.705-$1.649
Major Resistance: $1.90, $1.974, $2.019- $2.029
Minor Resistance: $1.864-$1.896

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Quiet — Inside Trade Day

Daily Continuation

Quiet day in the gas market as prices stayed within the range of Monday’s trade and spent the day consolidating. Due to this inactivity, comments have not changed. Play the range and we are pretty much in the middle– yee haw.

Major Support: $1.611-$1.59, $1.555-$1.519
Minor Support: $1.705-$1.649
Major Resistance: $1.90, $1.974, $2.019- $2.029
Minor Resistance: $1.864-$1.896

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