Author: Willis Bennett

Workin’ Hard For the Break At $2.00

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I am reminded of a tune where the lyrics say “workin hard for the money….” That defines the gas trade of recent — the bears want that breakdown so bad– to see what lies below. As mentioned in the Weekly section there is this type of support well into the mid $1.90’s and then just below that for another $.15. Perhaps they believe that the fundamentals warrant prices down to a multi decade low below $1.40. That is why there are markets — representing differing views and speculation. I am looking for technical divergences.

Major Support:, $2.00, $1.991-$1.96, $1.795-$1.766
Minor Support :
Major Resistance $3.00, $3.16, $3.48, $3.536, 3.59, $3.65

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Spinning Wheels

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Just to confirm what a nerd I am with this market — I have decided to watch the market in 5 minute increments for a change. Yesterday, trade came in selling for the until about 8 am Central time then spent the next few hours consolidating before building a small rally into expiration. Why do you ask why I bring this up– this consolidation type trading is extremely boring for this trader so I just to look for anything that can give me a directional bias. Not so yesterday. Play the range discussed in the Daily yesterday and if I wake up early enough tomorrow I will proved some key technical details — if i don’t (may go skiing) well you know what to do.

Major Support:, $2.00, $1.991-$1.96, $1.795-$1.766
Minor Support :
Major Resistance $3.00, $3.16, $3.48, $3.536, 3.59, $3.65

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New and Different?

Weekly Continuous

The February tried to rally but failed at declining resistance, reversed from that lower high, again, and faded into expiration. Settlement at $2.490 was $.131 less than January and $.247 less than the average monthly settlement during ’23. New prompt March, which was offered at a $.443 discount when Feb went off the board was left to set the important January low at $2.037 on the last trading day of the month. The “expiration” gap accounted for the first ever “outside” January (prompt gas traded through both the calendar December high and low). It does not get a lot more technically bearish than an “outside” month with a close below the previous month’s low with increasing volume. 9,899,538 contracts changed hands during December, 12,006,048 during January. It is interesting that the last time that much volume traded during a calendar month was February and March of ’20, when both month’s volumes were slightly higher as prompt gas began to construct a multi – year low. Despite trading within a narrow range (an average of $.102/day vs a 15 day ATR of $.264) March managed to trade two “outside” days. Back to back “outside” reversal days are rare and suggest market uncertainty. The new prompt ended the week by recovering from the lowest low traded since April 14th ($2.021).

March, is sitting right on top of serious conventional support…four consecutive monthly lows from February through May ’23 ($1.967, $1.944, $1.946 and $2.031). Unless March can get through all that support in a hurry it has the serious chance of drawing out speculators to challenge the resistance levels due to the markets inability to break lower. This may trigger another round of short – covering.

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$2.00 Holding Firm — So Far

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Not much to say about the technical side of trade — with the exception that $2.00 and just above seems to be finding some buyer. Went into the expectations in the Weekly should that break earlier, so hold on and see what happens (or sell some premium in the options market).

Major Support:, $2.00, $1.991-$1.96, $1.795-$1.766
Minor Support :
Major Resistance $3.00, $3.16, $3.48, $3.536, 3.59, $3.65

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Declines Start Consolidation

Daily Consolidation

Nothing more than previously discussed from a technical standpoint, with major support zones just below trade. With the upcoming storage report, perhaps the bears are looking for a flashpoint to add to the shorts.

Major Support:, $2.00, $1.991-$1.96, $1.795-$1.766
Minor Support :
Major Resistance $3.00, $3.16, $3.48, $3.536, 3.59, $3.65

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My Apologies No New Brilliance

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Nothing new in striking technical analysis other than what was said yesterday and in the Weekly section earlier this week.

Major Support:, $2.00, $1.991-$1.96, $1.795-$1.766
Minor Support :
Major Resistance $3.00, $3.16, $3.48, $3.536, 3.59, $3.65

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Seems to Test 2023 Support

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Understand the large gap from last Friday to yesterday was inclusive of the discount that March maintains to the Feb expiration– So all I can theorize is this bear market wants to test the numerous support zones mention in the Weekly area and then see what happens. Good luck picking your low.

Major Support:, $2.00, $1.991-$1.96, $1.795-$1.766
Minor Support :
Major Resistance $2.45, $2.56, $2.64, $3.00, $3.16, $3.48, $3.536, 3.59, $3.65

What To Do?

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My response to that heading is NOTHING. Go into some history and options in the Weekly section, but this discount issue needs to get resolved.

Major Support:, $2.00, $1.991-$1.96, $1.795-$1.766
Minor Support $2.47, $2.38-$2.26, $2.17
Major Resistance $3.00, $3.16, $3.48, $3.536, 3.59, $3.65

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Going to Set Some Rules and Ranges

Weekly Continuous

Momentarily, I thought my analysis last week in the Weekly was spot on as the differential between Feb and Mar narrowed down under $.30 for a very brief period of time. After the previous week’s weak close, the market strongly suggested February would be offered lower (hence the confidence in closing the differential). It was almost a given that any rally by the suddenly oversold prompt would be sold at a lower high. Surprisingly, February recovered as much as it did, but not surprised when it reversed lower from $2.884 (the continuation 20 – week SMA was $2.877). The violated daily trend line and important moving averages provided daily closing resistance but little else can be drawn from the wide ranging days other than the to date calendar January trade low is higher than the December low.

It is difficult to put a bullish spin on the price action last week but the March chart develops a few factors that serve to mitigate an overly bearish outlook. Perhaps the most significant of those is that March is sitting atop support that is more distinctly defined than at any time since the spring of 2020,(see March chart below) and before that during the late winter/early spring of 2016. Won’t spend a lot of time on those historical levels of support and how they were tested and held, currently, but long time readers will hopefully recall long past discussions of the consistency of prompt gas to trade in four year cycles. While not always exact…some a little longer, some not quite as long, that cycle can easily be observed since the beginning of natural gas trading in the spring of 1990…most recently 2012, 2016, 2020…2024??

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Prices got a solid bid during the night on Wed night — so much that it challenged $2.88+. Did not last long, when the market came in and declines started in earnest and broke below the previous close. Interesting to watch — but I would not trade this market until it defines solid support and resistance. Remember, that the Feb is now at a $.40 premium to March and March is trading in and below a major support zone.. Going to take a casual approach to this expiration — focusing more on the continuation charts.

Major Support:, $2.00, $1.991-$1.96, $1.795-$1.766
Minor Support $2.47, $2.38-$2.26, $2.17
Major Resistance $3.00, $3.16, $3.48, $3.536, 3.59, $3.65

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