Author: Willis Bennett

First off– We are in the midst of moving the office to another location which will require interruptions of internet access. I will try to get updates on the Daily out in a timely matter but there may be some issues with getting them in the email. Should you not get the email, turn to the website for the Daily. We experienced some slight problems last week but believe we had them rectified.

Prices broke down and found support at key levels around $1.60. Expect this to continue. Volume was higher week over week and open interest gained towards the end of the week. An interesting development occurred when prices declined at the first part of the week, volume was significantly lower. As price gained some support, volume rose significantly. Not sure what news is going to hit the market and create a directional bias, so continue to play the range.

Apologies for the lack of a Daily yesterday, but circumstances would not facilitate. Nothing new to report except that the market is very comfortable with this range (major range between $1.51-$2.00, inside range of $1.60-$1.90) for a couple of months now and what is curious to this observer is the lack of interest in selling the winter down on these moves down. Looking at the chart above the winter has declined almost 5% from the early May high while the series of prompt months (June and July) have shed nearly 26%. The market seems to be saying that summer is no issue — plenty of gas to inject but not sure about next winter. Seems to be a good time for a storage operator. What confuses me, is the lack of selling into the winter with great margins for the storage operators. As discussed in the long term on the web site, something is going to break here.

Prices continued the melt-down as prices broke below the trend line of support from the March and May lows and extended the declines to the lows from May. Now what — as mentioned on the long term outlook- prices could decline beyond those May lows but will find a plethora of buyers as prices go down to the well supported lows. BTW- the Bollinger Band, discussed in the Long Term section, is at $1.56 currently.

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

Prices extended the weak close last week, taking prices down to the support trend line from the March and April lows in the Continuous chart. Each of the remaining summer months brook below there previous contract lows. That said, the winter months did not extend to a lower low for those contracts. The spreads between the prompt and the remaining summer months expanded on the declines. The market seems to be setting up for another month of premium to the the next prompt expanding to the existing prompt into expiration, only to allow the premium to be hammered after the new prompt takes over.

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

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

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

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

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