Author: Willis Bennett

Solid Run to Resistance

Daily Continuous

Prices are now challenging the high end of the resistance for the May contract– likely stating that the action is headed to extend lower before expiration. Doubt the declines will match those of the March and April contracts capitulation but the trade has continued to be range trade so a challenge to resistance will be met with selling and a decline back into the range.

Major Support:, $1.595, $1.52-$1.511, $1.481, $1.312
Minor Support :
Major Resistance: $1.94-$1.967, $2.00, $3.00, $3.16, $3.48, $3.536, 3.59,

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Range Events Create Limited Analysis Insight

Weekly Continuous

Previously, the low of May’s tenure was $1.686 ( inside the targeted zone of support, on its second day as prompt). This past week May finally took a couple of shots at closing the “expiration” gap left open on 03/27, neither quite made it. On the 16th May traded to $1.649, on the 17th to $1.660 which leaves a remnant of the gap between $1.647 and $1.649 still unfilled. Perhaps close is good enough natural gas does not like a vacuum, do not be surprised if May completes the task during its last week.

Contrary to that expectation is May’s reaction when it came close -the first time it ripped higher, trading to $1.802 in less than an hour. During the hour before May printed the week’s low 14,008 contracts traded, during the hour that low and reversal traded 50,239 (which makes me think that more than a few participants were paying attention to that gap and scrambling to get out of positions). Since May faded into the close setting up another test (total open interest fell for the first time in five days) it could only have been short covering, but $.153 in less than an hour serves as a good example of how quickly prices can disappear in a thin market.

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Some Evidence Developing

Daily Continuous

Discuss some of the elements that the market is starting to advertise as to future in the Weekly / Long term section, but most are light at this point so the likely hood of any break out is limited. May prompt has five days left and expect a complete closure of the gap from the April expiration but am not convinced of the expiration weakness that the last two expiration’s experienced. Volatility will return to the market but unlikely until power demand and expectations starts to rear it’s head.

Major Support:, $1.595, $1.52-$1.511, $1.481, $1.312
Minor Support :
Major Resistance: $1.94-$1.967, $2.00, $3.00, $3.16, $3.48, $3.536, 3.59,

Not Much For Now

Daily Continuous

Boredom abounds as I can’t even get my fundamental folks to lead into a discussion– here we sit going into yet another storage release from just about the same price (give or take a dime from $1.70)– not even going to waste the time to count how many but it has been a few Thursdays. Well load up on the premium and watch the paint dry.

Major Support:, $1.595, $1.52-$1.511, $1.481, $1.312
Minor Support :
Major Resistance: $1.94-$1.967, $2.00, $3.00, $3.16, $3.48, $3.536, 3.59,

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Interesting Trade Day

Daily Continuous

I must admit that I try too hard sometimes to read into trade bias during the day and yesterday was a a great example. The morning trade closed the expiration gap from the end of March and my belief was .. lets go test the lows… instead prices rallied back and were up on the day before collapsing back under $1.70 at the time the stock market closed. Got no clue on how to explain that movement nor the timing.

Major Support:, $1.595, $1.52-$1.511, $1.481, $1.312
Minor Support :
Major Resistance: $1.94-$1.967, $2.00, $3.00, $3.16, $3.48, $3.536, 3.59,

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Testing Calendar Low

Daily Continuous

We might be finding some excitement as the prompt May contract is challenging the calendar low for the month. A breakdown may take prices to the support from the previous months expiration lows. It may also close a small gap in the Daily trade. Finally, something to discuss– no bias adjustment in this move.

Major Support:, $1.595, $1.52-$1.511, $1.481, $1.312
Minor Support :
Major Resistance: $1.94-$1.967, $2.00, $3.00, $3.16, $3.48, $3.536, 3.59,

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Working Hard For the Money

Weekly Continuation

The week before last week, gas traded a total range of $.200, further defining already well – defined support and resistance this last week it traded a range of $.212. This last week after opening a little lower May reversed, rallied through last week’s high only to fail at its 50 day SMA and a trend line declining from its late January and early March highs. A daily reversal on 04/10 (very similar to the reversal traded exactly a week earlier on 04/03), preceded the largest daily loss of May’s tenure and with the highest volume. Support near the upper limit of a zone between May’s February and March blocked a test of the target zone ($1.600 – $1.700, and the “expiration” gap left on 03/27 .

The entire range traded during April, ($.237) is less than half of the range and well within the extremes traded during March ($.528, $1.481 –$2.009). The range traded during February was $.657, in January $1.355. Range contraction typically occurs, at or near the end of a downtrend as a “sold out” market attempts to define a base. Less common is a high volume price spike lower, which is characteristic of “capitulation”, followed by reversal also with significant volume. Given the persistent, extraordinary level of open interest the less common resolution not completely out of the question, but recent trade has the earmarks of the construction of a classic base.

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Different Contract Prompt – Similar Range

Daily Continuous

Are you asleep yet–volatility will return to this market (as it always does) but similar to the last few years it will take some time (discussed recently) to work through the range traders. Until the set up is adjusted continue to sell premium at both ends of the bias spectrum.

Major Support:, $1.595, $1.52-$1.511, $1.481, $1.312
Minor Support :
Major Resistance: $1.94-$1.967, $2.00, $3.00, $3.16, $3.48, $3.536, 3.59,

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No Ceiling Break

Daily Continuous

No breakage of the ceiling yesterday — instead the price run failed and prices went back into the mini-range for the May contract. Am going to be interested in the weekly momentum and internals for this week. Will discuss in the Weekly section next week.

Major Support:, $1.595, $1.52-$1.511, $1.481, $1.312
Minor Support :
Major Resistance: $1.94-$1.967, $2.00, $3.00, $3.16, $3.48, $3.536, 3.59,

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Bumping Upon a Ceiling

Daily Continuous

Still looking at the recent range trade, but I am noticing a trading behavior that seems to want to build on gains and test the “ceiling” of the recent range. This is the behavior of a market seeking to a price to force some short covering. Not saying that it is today with the storage report, but a behavior that should be respected.

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