Author: Willis Bennett

Still Over-bought But Moderating

Weekly Continuous

The gains continued last week, the decline in open interest…indicating substantial short covering was a significant contributor to the rally, discussed in some detail last week, continued. Until an increase on Thursday, only the second daily increase since 10/16, the total number of contracts outstanding had fallen for ten straight days. Prompt gas closed higher on 13 of those 20 trading days and only once was there consecutive lower daily closes (three straight between 10/22 and 10/24).

The decline to Wednesday’s low total of contracts outstanding brings the reduction to 200,007 contracts (11.6%) while including a significant contribution from the premium of December over expired November ($.439) prompt gas has rallied, on a daily closing basis, from $2.938 to $4.533 ($1.595 or 54.3%). This represents an epic short covering rally.

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Rally Slows Momentum

Daily Continuous

Price positive action with one setback left prices at the high end of the range. Go into some of the underlying technical indicators in the weekly section. Would be cautious in adding significant length until the directional bias becomes better defined.

Major Support: $4.219-$4.139,$4.083,$4.055,
Minor Support : $4.46-$4.42, $3.75,$3.65
Major Resistance: $4.73-$4.75. $4.901,

Developing a Range

Weekly Continuous with Bollinger Band and RSI

The strength in the prompt is challenging levels (3 standard deviations) over the 20 week SMA and the over bought levels in the Weekly RSI. These are levels that are usually met with some sort of brief correction.

Major Support: $4.21-$4.139,$4.122,$4.055,
Minor Support : $3.942, $3.75,$3.65
Major Resistance: $4.394, $4.461-$4.475, $$4.901,

Today Will Be a Test On Highs

Daily Continuous

Prices remained strong, holding the gains of the past few days, setting up for a potential confirmation with the storage report. A bullish release will further support the recent movement, while a bearish release will force some traders to evaluate positions.

Major Support: $4.21-$4.139,$4.122,$4.055,
Minor Support : $3.942, $3.75,$3.65
Major Resistance: $4.394, $4.461-$4.475, $$4.901,

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That’s a Solid Test and Rebound

Daily Continuous

Prices seem to want to test the high side of the Nov contract range that has been developing. Positions should hold until existing weather moves on and the storage report is released– watch for a retracement back to the early month lows ($4.20-$4.00).

Major Support: $4.21-$4.139,$4.122,$4.055,
Minor Support : $3.942, $3.75,$3.65
Major Resistance: $4.394, $4.461-$4.475, $4.49-$4.55, $4.901,

Early Strength Retraces Gains

Daily Continuous

Early strength mentioned in yesterday’s Daily evaporated quickly as the full market opened and forces prices down. Expected, per the Weekly and Daily sections, weakness was expected from the over bought level of the market. Not convinced that the retracement is finished– if you are buying be patient–if you are selling be opportunistic.

Major Support: $4.21-$4.139,$4.122,$4.055,
Minor Support : $3.942, $3.75,$3.65
Major Resistance: $4.394, $4.461-$4.475, $$4.901,

Short Covering Fuels Some of Run

Weekly Continuous

Last week’s gains extended the run that started with the premium afforded the December contract. Total open interest had increased substantially (86,824 contracts over five trading days) while November faded from a 10/08 high at $3.550 to a 10/16 low of $2.922, likely due to aggressive speculative short selling. In the recent weeks prompt gas has closed higher in 10 of 15 trading days with a notable contribution from December’s premium over expired November ($.439), has traded almost $1.50 higher.

December would fail at well – defined resistance provided by the trend line declining from its March – June highs and its declining 20 week SMA. It didn’t. A trend line and moving average violation like that is a serious technical positive. Mentioned it at times during Oct with the Nov contract, but did not occur. During the rally from that above referenced October low open interest has fallen from 1,721,787 contracts to 1,556,062…165,725 (through the 11/06 close, open interest statistics lag one day), 75,982 of that during the five days ending 11/06. Over the sixteen trading days since the peak of open interest the total has fallen in all but one day. To this analyst this is a great example of a short covering run in prices.

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Sunday Trade Starts Strong

Daily Continuous

Strength continues in the Dec trade but now has become a little over extended on the bullish side as discussed in the Weekly Section. Would expect some retracement of prices in the near term– but from where the technical data points don’t show any except the resistance areas discussed.

Major Support: $4.21-$4.139,$4.122,$4.055,
Minor Support : $3.942, $3.75,$3.65
Major Resistance: $4.394, $4.461-$4.475, $$4.901,

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Tight Range Continues

Daily Continuous

The storage release provided little momentum as prices challenged the highs but could not eclipse. Now the market will look for additional fundamental reasons to direct the next bias.

Major Support: $3.06, $3.00-$2.97, $2.843, $2.727, $2.648
Minor Support : $4.16, $4.08, $3.16
Major Resistance: $4.373, $4.461,

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Looks Like Some Calmness With Consolidation

Daily Continuous

Price action is holding firm with some tight daily ranges which signals a lack of commitment from the masses. Today may provide additional information on the the near term bias. While the break above $4.00 provided some income in the last week, the storage report will determine the future action in the next week.

Major Support: $3.06, $3.00-$2.97, $2.843, $2.727, $2.648
Minor Support : $4.16, $4.08, $3.16
Major Resistance: $4.373, $4.461,