Author: Willis Bennett

Daily Continuation

Weekly Continuous

The most interesting near term technical factor is the trend line rising from the continuation October low (see Daily chart above). Similar trend lines rising from the December lows of February and March gas (See March gas below) were tested during the past week. Each time their recovery from the rising support attracted less volume.

Going into expiration period over the next three days. Expect the trend line to continue to guide prompt gas higher toward resistance defined by the zone between the December and January highs. Should the trend line (support) violation break — it likely to announce the beginning of the decline toward a late Q1/early Q2 seasonal low. Expect significant moderation of price as we progress through Q1. The average decline from Q4/Q1 highs to late Q1/early Q2 lows is a little more than 40% for successive prompt months, less for deferred months. There is likely to be a substantial “expiration” gap after February expires. That gap will provide the market important resistance to an extension of any rally in March gas.

Weekly Continuous

Prompt with a gap and strength but did not remain above the December high for very long and ended the week at $3.916 with trading volume substantially less than on 12/30 (685,311 v 998,839), which creates another volume divergence. Not give up it performed another try on Thursday, leaving the prompt at the highest close ($4.258) since the last trading day of 2022 but again volume significantly lagged that traded at the December high and February fell to finish the week lower without testing Monday’s gap higher. While prompt gas continues to work higher the lower weekly close was the third in the last four weeks.

Prompt February was the only monthly contract to finish the week with a loss. Prompt in waiting March gained $.081, reducing February’s premium to $.469 from last week’s peak of $.591. A year ago when February went off the board at $2.490 March ’24 was $2.054 and was never able to make up much of that discount. Trading the high of its tenure on 02/01 at $2.168 before falling to $1.502. Will see if history is going to rhyme.

Weekly Continuous

A significant technical factor was Friday’s higher daily close, which leaves the daily closing trend intact. The trend of a series of higher lows…and now a higher high since prompt November closed at $2.258 on October 17th. This week’s close at $3.989 validates last week’s higher low at $3.354 and suggests trend continuation. The higher weekly close (see Chart above)…the highest since the beginning of 2023 (and above the 2016 weekly closing high) tends to confirm the breakout from a lengthy flat base. There is little definable weekly closing resistance other than a low close in February ’22.

At the low daily close in October the daily ATR (a measure of volatility that is essentially the average range of the last fifteen days), was $.119 and has more than tripled since then to $.359. Comparatively, during the rally from the April low to the June Q2 high the daily ATR increased from $.091 to $.205. Following the January ’24 high the peak was $.312 (the peak of the ATR usually lags the price high). The highest calculation of the last several years was $.769 in June ’22.