Author: Willis Bennett

Further Collapse

Daily Continuation

What timing the market continues the declines and I found internet service for a while. A big target on conventional support presented by the highs of calendar March and April ($2.009 –$2.092) and then the “expiration” gap left after May gas went off the board ($1.848 –$1.913, ). My thoughts (as suggested the other day) were that those targets will remain untested until later in Q3 (sometime around the annual Labor Day lows) but not right now. It may prove noteworthy that September traded a lower low while it was losing the little bit of premium that had been awarded over August. I still believe (though feeling lonely) that still expect a July rally from a post – Independence Day low.

Major Support:, $1.52-$1.511, $1.481, $1.312
Minor Support : $2.00, $1.967- $1.94
Major Resistance: $2.44-$$2.502, $2.618, $3.00, $3.16

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Declines May Form the Q3 Low

Daily Continuous

Was expecting the annual Q3 low to occur either side of Labor Day but the way this market is behaving — it may happen in July. Will have to look into how many times that has happened while traveling this week. Headed to Montana and the cell / internet service will be spotty until next Tuesday. We all need a week off and I will be enjoying mine. Will check in when available — in the mean time — sell premium and should the market reverse (expected) will be highlighting it if possible.

Major Support:, $1.52-$1.511, $1.481, $1.312
Minor Support : $2.26, $2.168, $2.12, $2.00, $1.967- $1.94
Major Resistance: $2.44-$$2.502, $2.618, $3.00, $3.16

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Still Trying To Define Low End of Range

Daily Continuous

Still trying to have the market confirm the low end of the new trading range. The declines do not confirm the support areas by significant divergences, and prices meander around, looking for a boost up or down. Seems like a great time to sell premium in the options market.

Major Support:, $1.52-$1.511, $1.481, $1.312
Minor Support : $2.41-$2.31, $2.26, $2.168, $2.12, $2.00, $1.967- $1.94
Major Resistance: $2.44-$$2.502, $2.618, $3.00, $3.16

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Stumped

Weekly Continuous

August finished Monday higher for the first daily gain of its tenure as prompt (actually for the first time since a daily reversal higher on 06/24). Some of that support interest in August was a product of late coming shorts covering, but a 13,600 contracts increase in open interest suggests that there was also some new buying. The reversal from a lower low was enough to inspire an extension of the bounce to test first resistance. The value of the declining 40 – week SMA was $2.442, the high for the week was 2.448. Failure at the moving average resistance was followed by three more lower daily closes (making it eleven of twelve for August gas since June 24th (which rivals the nine of ten lower closes that led to the February low). The lowest of the daily closes was $2.269 which was the lowest for a prompt contract since 05/10. Violation of that zone of support would put a big target on conventional support presented by the highs of calendar March and April (2.009 – 2.092, see Chart I) and then the “expiration” gap left after May gas went off the board ($1.848 – $1.913,). My guess is those targets will remain untested until later in this quarter but not right now. It may prove noteworthy that September traded a lower low while it was losing the little bit of premium that had been awarded over August.

With prompt gas having tested and retested the support within that range an intermediate term uptrend began during Q2. That uptrend extended into the band of resistance, but the divergences that have occurred indicates that the sponsorship to break from the long term trading range was absent and an intermediate term down trend (the declines from the Q2 high toward a Q3 low) has begun.

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Will Storage Bring Volatility

Daily Continuous

Spoke yesterday about a consolidation phase going on after the declines last week– lets see if the storage report will bring some volatility to the market in either direction. My guess would be no that we are in this range for a while.

Major Support:, $1.52-$1.511, $1.481, $1.312
Minor Support : $2.41-$2.31, $2.168, $2.12, $2.00, $1.967- $1.94
Major Resistance: $2.44-$$2.502, $2.618, $3.00, $3.16

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Consolidation After Steep Declines

Daily Continuation

After last week’s rapid declines– the market seems to be developing a “consolidation” pattern at the lows but the declines may return. Not sure what the fundamental folks are tracking with the loss of demand and the loss of production due to the storm. That will play out next week. In the meantime play the historical trends and the range of the last week.

Major Support:, $1.52-$1.511, $1.481, $1.312
Minor Support : $2.41-$2.31, $2.168, $2.12, $2.00, $1.967- $1.94
Major Resistance: $2.44-$$2.502, $2.618, $3.00, $3.16

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Found an Initial Bounce

Daily Continuous

Was expecting some sort of slight bounce off of the declines last week and perhaps we got the the initial yesterday with the gains. Curious as to the demand destruction versus the shut-ins struggle for the traders with the storm– it is likely we will see it in the next day or two.

Major Support:, $1.52-$1.511, $1.481, $1.312
Minor Support : $2.41-$2.31, $2.168, $2.12, $2.00, $1.967- $1.94
Major Resistance: $2.44-$$2.502, $2.618, $3.00, $3.16

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That Is a Bearish July 4th Trade

Weekly Continuous

The case was made that conventional and moving average support would provide a floor for the historically consistent price decline bracketing Independence Day — to say the least –it didn’t. Since a day before July went off the board (06/25) amply offered August gas has closed lower for eight straight days. Add to that, the prompt plus the last two of July’s, and at Friday’s low retraced 50% of the rally from the March Q1 low to the June Q2 high.

The historical averages for the seasonal decline (per the chart provided previously) were: 20 years, 16.4%, 10 years, 13.5%, 5 years 13.7%. The following is an update summarizing the recent declines and the results:

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Where Be the Support

Daily Continuous

That was a weak week as prices declined each and every day — not were headed near the extreme area on the RSI chart, as discussed in the Weekly section. How far it goes is anyone’s guess but this will be a key week. The open last night was weaker but found some support off of the opening– but we will see when the demand and supply effects from the hurricane hit the market.

Major Support:, $1.52-$1.511, $1.481, $1.312
Minor Support : $2.41-$2.31, $2.168, $2.12, $2.00, $1.967- $1.94
Major Resistance: $2.44-$$2.502, $2.618, $3.00, $3.16

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Continue to Expand The Support Area

Daily Continuous

First off let me wish you all a wonderful weekend celebrating July 4th. I say weekend because this will be my last Daily until July 8th. Not much to say as prices continue to search for the low end of the range for the August contract. It will form and use that as a base for the rest of the month– whether or not it is the Q3 low is a different question.

Major Support:, $1.52-$1.511, $1.481, $1.312
Minor Support : $2.64, $2.448, $2.168, $2.12, $2.00, $1.967- $1.94
Major Resistance: $3.00, $3.16

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