Author: Willis Bennett

Not Sure if Q3 Low Is In

Weekly Continuous

September plunged through the conventional support zone and closed below both on Tuesday with a significant increase in volume, oddly though the prompt recovered. The extension of the decline to close at $2.808, the lowest daily close since November 14th, below definable support with the highest volume since 07/23 had the earmarks of a decline that would be extended lower– Huh – volume, although still higher than average began to dry up, and the ranges traded during the two days following the new low close were less than a dime. The restricted ranges and the closes near the highs were clear suggestions that the enthusiasm of Tuesday’s sellers had, substantially diminished.

There is still a lot of negative seasonality ahead, including the period bracketing Labor Day that will be the primary focus of the next Week’s, but a weekly reversal (the close for the week was higher than the open after trading a lower low) with increased volume, to hold the trend line feels like a rejection of lower prices. The determining factor will be whether the trend line declining from the June and July highs (currently $2.980) continues to guide prompt gas lower or a will it be violated and trigger a short covering rally to test some of the plentiful resistance between $3.20 and $3.50.

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Must Be a Negative Storage Release

Daily Continuous

Prices tanked on Tuesday and showed no signs of rebounding yesterday. My only guess is that the storage release today must be very bearish with a significant injection but that is fundamental information, I don’t track such things. Perhaps that everyone one is suspecting bearish data, when they get the data, there are no more sellers. We shall see.

Major Support: $3.054-$3.007, $2.97, $2.727, $2.648,
Minor Support :
Major Resistance:$3.167, $3.25-$3.31,$3.39, $3.62, $4.168, $4.461, $4.501

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Market Not Expanding Declines from Death Cross

Daily Continuous

Weekly Continuous

Wanted to show on both the Weekly and Daily charts the Death Cross formation (when the short term moving averages break below the long term averages) and responding to a question from one of the readers. While a bearish formation indicating the potential trend change, I chose not to highlight as the market seemed to be focused more on the ranges each contract had developed. Note on the Daily Chart a “cross” occurred last year and after a few days. Perhaps this year is different but I would not add significant short positions until the duration of impact is better defined.

Major Support: $3.054-$3.007, $2.97, $2.727, $2.648,
Minor Support :
Major Resistance:$3.167, $3.25-$3.31,$3.39, $3.62, $4.168, $4.461, $4.501

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What’s Coming

Daily Continuous

Declines continue but would hesitate to suggest adding to shorts until the range provided, break down. Look to the Weekly section for expectations for the declines and weekly bias.

Major Support: $3.054-$3.007, $2.97, $2.727, $2.648,
Minor Support :
Major Resistance:$3.167, $3.25-$3.31,$3.39, $3.62, $4.168, $4.461, $4.501

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Market Against Medium Term Support

Daily Continuation

Gap open on Sunday night– looks like some folks want to challenge support trend lines and a series of recent lows. Be fun to watch the movement over the next week or so to see if the declines gain on momentum or just daily losses in little increments with little enthusiasm.

Major Support: $3.054-$3.007, $2.97, $2.727, $2.648,
Minor Support :
Major Resistance:$3.167, $3.25-$3.31,$3.39, $3.62, $4.168, $4.461, $4.501

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Likely To Be Important Week for Bias

Weekly Continuous

Rather than my expected recovery (prompt gas typically rallies from a late July/early August low) September continued to find substantial selling between $3.100 and $3.150 (the highs of the last seven trading days have been within that zone and with the exception of a downside reversal day on 7/30 ($3.186) since 07/24. Fading from that band of resistance September traded through the calendar July low ( not particularly unusual, it has now done so in 14 of the last 20 years), but then posted the lowest daily closing price since last November ($2.823, 11/15).

The recovery from Monday’s low of $2.895 (the lowest low since prompt May was about to go to settlement) left the first suggestion of a momentum divergence that we’ve seen during the decline from the June Q2 high. A reversal from the high of that recovery (08/07, $3.148) suggests that September has not yet developed the sponsorship for the expected seasonal “correction”.

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Rebound Off of Support

Daily Continuous

Spoke yesterday regarding the break down in prices and whether it was going to be built on with additional declines. Prices started lower, but then had a solid rebound. Next issue will be the storage release today and will the gains remain.

Major Support: $3.054-$3.007, $2.97, $2.727, $2.648,
Minor Support :
Major Resistance:$3.167, $3.25-$3.31,$3.39, $3.62, $4.168, $4.461, $4.501

Fake to the Down Side

Daily Continuation

Did not publish last night as I was wondering if the 1st close below $3.00 was indicative of price bias in the immediate term or a “one-off”. The answer came in trade yesterday which held support and then rallied. The game is not over for an extension of the gains, but rather a rebound. What was more interesting was the gains in some of the winter months as the Sept prompt rallied. Sept, as prompt may have some volatility, but some of the winter contracts may preform better from the long side as we head into fall and winter. The downside needs to see additional momentum to the bias and not run out of steam (keep an eye on open interest).

Major Support: $3.054-$3.007, $2.97, $2.727, $2.648,
Minor Support : $3.30-$3.26
Major Resistance:$3.25-$3.31,$3.39, $3.62, $4.168, $4.461, $4.501

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A Market Needing Stimulus

Weekly Continuation

August extended its decline, trading just through $3 before going off the board at $3.081, the lowest contract month settlement since November ’24 at $2.437. To close out calendar July, new prompt September undercut the pre-expiration low by a penny before reversing higher. On a continuation basis prompt gas closed lower for the fifth time over the six weeks. While the open and close numbers are not exact, prompt gas ended the week near where it began when trading resumed ($3.083 v $3.093). That’s close to but not a textbook doji, but it is close. This pattern can suggest some measure of exhaustion for the downtrend that has now extended $1.176 or 28.4% from the 06/20 failed test of the April high. While the downtrend may be temporarily exhausted seasonal pressure almost certainly isn’t.

An early August rally is typical of September’s tenure as prompt followed by a fade into expiration. In ’24 September peaked on 08/15 at $2.301 after rallying from a post – August expiration low of $1.882 then retreated to exactly test the July low of $1.856 (hard to believe that the July and August lows were identical) before recovering to go off the board at $1.930. That rare, perfect “double bottom” has never been retested. Do not expect history to repeat itself but a similar pattern with different levels may occur.

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Light Sunday Trade Wants to Break $3.00

Daily Continuous

Went into expectations of the September contract in the early Aug period in the Weekly Section. Prices opened softer on Sunday night suggesting additional weakness during the trade day. Clearly at major support so I would not expect a major break down, rather an other test of support.

Major Support: $3.054-$3.007, $2.97, $2.727, $2.648,
Minor Support :
Major Resistance:$3.25-$3.31,$3.39, $3.62, $4.168, $4.461, $4.501

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