Author: Willis Bennett

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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Historical Weakness Around Memorial Day Continues

Daily Continuous

History has a tendency to repeat itself and I have discussed the history for early June trade to weaken with the July as prompt. That happened again yesterday as price tried to break below last Friday’s low for July gas only to find buying once again. Seems like a fair amount of struggle is going on between the early morning camp which likes to send price down to support (speculation between 5 and 7 am CDT) followed by the physical delivery folks (between 7 and 9 am CDT). Not sure whats going on there but it is interesting to trade around. Again, the market is in a range trade environment for now and trade it accordingly.

Major Support: $1.611-$1.59, $1.555-$1.519
Minor Support: $1.82, $1.705-$1.649
Major Resistance: $1.90, $1.974, $2.019- $2.029
Minor Resistance: $1.864-$1.896

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Prices Reverse Off New July Low

Daily Continuous
July Spot Contract

After trading down and setting a new low for the July contract early in the trade day, consolidated the declines for a while before prices found buyers and rallied through the remainder of the day. This left prices with a gain for the day. Go into some interesting trends for prices on the web site and encourage all to find 15 minutes to review. As for the daily prices, the reversal on Friday was quite impressive (from preliminary data from the CME) with the movement accompanied by highest volume of the week and gains in open interest.

For the last ten trade days, the market has traded in the range between $1.68 and $1.98 after exploding up to $2.16 before capitulating down to $1.595. Even with the expansion of the range some interesting trends for prices are explained on the web site and encourage all to find 15 minutes to review. With the close on Friday, prices now sit in the middle of the narrow ten day range. Pick your poison.

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Market May Be Showing Signs of Bias Change

Weekly Continuous
Monthly Continuous

Looking at the charts over the weekend and found some interesting trends that have been developing since the lows were printed in the middle of March and retested at the end of March. Notice on the Weekly chart above, the market has now performed three (if you include last week’s mild run) distinct rallies only to succumb to selling pressures. These selling pressures have taken prices down but the lows from each decline has had a higher low. If you look at the trade action before the March low, any rally was pounded and developed a lower low after the failure of the rally since the Q4 high on the chart.

A similar trend is seen on the Monthly chart (albeit for only two months), with the May low staying above the April low. This subtle trend change does not eliminate the potential for additional declines, but rather is a subtle indication by the participants that interest in extending beyond the March, lows seemingly runs out of steam.

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Slight Declines Continue

Daily Continuous

Spot July Contract

Prices continued the historical trend of declining in early July prompt trade but stopped at trend line support and lows established in March. If that support breaks- then expect trade to decline another dime. The market remains in the range but is starting to attack the premiums of the differed summer contracts, staying with in the range. That is a trading opportunity near term.

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Prices Run To May Expiration

Daily Continuation

As discussed yesterday, the expectation was for prices to expire within a few pennies of May, as nothing has changed from a technical perspective. This author will let you fundamental folks to discuss the fundamental changes since the May expiration. What will be of more importance is the July contract trading in relation to the expiration as we may get more information to the seasonal historical trends discussed in the web site. Be patient and work the range.

Major Support: $1.611-$1.59, $1.555-$1.519
Minor Support: $1.705-$1.649
Major Resistance: $1.82-$1.849, $1.873, $1.90
Minor Resistance: $1.799, $2.029

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