Author: Willis Bennett

Prices Remain Within June Range

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Mentioned in the Weekly earlier this week that the June contract would define its own range which it is and the current range (as in Weekly) remains $1.90-$2.15. As discussed this week will likely define the near term direction for bias.

Major Support:, $1.595, $1.52-$1.511, $1.481, $1.312
Minor Support :
Major Resistance: $1.94-$1.967, $2.00, $2.08, $2.148, $2.168-$2.411 (gap)

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Didn’t Like the Altitude

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Well, prices close above $2 but then spent yesterday retracing back under that key area. Problem for the bears is that prices didn’t collapse and rather found support above last week’s low for the June contract. Perhaps, that could be interpreted as a bullish divergence but would not take that to the bank. As mentioned yesterday — perhaps (as a trader), you need to take a time out and let the market define its intentions.

Major Support:, $1.595, $1.52-$1.511, $1.481, $1.312
Minor Support :
Major Resistance: $1.94-$1.967, $2.00, $2.08, $2.148, $2.168-$2.411 (gap)

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Rare Close Over $2

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A close above initial resistance is an interesting signal — the question will by how long does it hold the gains. Will this signal a bias change — this week will provide answers.

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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Expect the Same Until It Doesn’t

Weekly Continuation

Friday’s contract expiration was remarkably reminiscent of the last days of the March and April contracts. May traded a new low for its tenure as prompt just as the two immediate predecessors, at $1.482, before settling at $1.614 (granted the low was traded in the early morning with little or no volume).

With May off the board at $1.614 the June (soon to be prompt) closed on Friday at $1.923, $.309 premium…nearly a dime (actually $.099) more that May was awarded over April and $.105 more than April over March. Deferred contracts have constructed their own trading ranges (discussed recently), each of which have ultimately been violated to the downside as the expiration of those contracts approached. April’s range was +/- $1.70 to $2.00 before it broke down to settlement day low of $1.481. The calendar March low was $.03/dt lower than the February low. May’s range during April’s turn as prompt was nearly the same as April’s had been except the upper limit was a little lower. Prompt May also broke down to a settlement day low ($1.482, holding .001 above the March low before recovering). Unless new prompt June falls $.442 during the last two trading days of April $1.482 likely, will be the April low, the first higher monthly low since October. Just to continue the analogy, a year ago the April low was $1.946, $.002 higher than the calendar March ’23 low. May ’23 traded that low on 04/14 rather than coincident with expiration and then settled higher at $2.117 (suggesting a departure from the established pattern).

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Where We Going

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During 2024 the gas market has left several “expiration” gaps. “Expiration” gaps are not uncommon. What is uncommon is if/when they go unfilled for any significant length of time. There was one back on 12/28 after January went off the board premium to February. That gap was filled during February’s first day as prompt. The next one was a big one and remains open between $2.168 and $2.441. March failed after narrowing the gap about a nickel (signalling an excellent indication that much lower prices were in store). That the gap will likely be filled, but not right now. Since the gap that followed February expiration, there have been two others and now likely a third. The first two (after March and April expiration’s) were filled in the following monthly trade. On Monday, if June opens unchanged there will be a $.281/dt daily continuation expiration gap (between $1.628 and $1.909)–and a weekly continuation expiration gap between $1.848 and $1.907. Due to the timing of contract expiration’s there hasn’t been one of those for a while but a weekly of anything is more significant than daily. Expect both will be filled sooner rather than later.

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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Expiration Day

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Here we are at expiration and the variances between prompt May and the rest of the market have become pronounced. My suggestion remains the same from yesterday.

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,

Expiring May Gets Crushed

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May got hammered while the rest of the summer was weaker but not to the extent of May’s declines. Now becomes the silly expiration process — I may have been wrong in not seeing the May expiration testing the lows of the previous two month’s expiration. Clearly, its in range now after yesterday’s declines. As you all know I do not venture with position going into option expiration nor contract expiration. My goal in this process is to establish good positions to sell in the options market.

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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Still Hanging at Resistance

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Prices closed the day at the high and key near term resistance area. Now what? Does it break out above (expect serious short covering) or just return to the low end of the recent range at $1.60). Lets watch with selling premium at higher levels.

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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Solid Run to Resistance

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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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