Author: Willis Bennett

No Lipstick

Daily Continuous

There is not enough lip stick around to paint this pig market. Go into the effects of last week’s trade on the upcoming month in the Weekly section. Not looking like break outs or break downs. Have fun — if something remotely interesting happens I will publish a Daily – going to be traveling and have little to no interest is trying to put any color on this pig.

Major Support: $2.47, $2.00, $1.991-$1.96, $1.795-$1.766
Minor Support $2.38-$2.26, $2.17
Major Resistance$2.83, $3.00, $3.536, 3.59

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Gap Open For Prices

Weekly Continuation

When the week started — prices gapped lower and never came close to closing the gap during the holiday week. Discussed the historical tendencies of price action around the holiday with the declines consistent. In some years the decline is severe, some modest, the average of the last ten is about 10%. After closing at $2.765, gap-piing lower on Monday/Tuesday when trading resumed. On Thursday, after trading to the week’s low of $2.500 the prompt reversed higher from support and registered a decline of 12.7% from the 08/31 high. Given that October continued to follow the recent trend on the technical script the guidance is that the trading range will likely continue through at least the remainder of October’s tenure.

The gap left on 09/05 remains open between $2.708 and $2.735, together with a trend line drawn from the August and pre – Labor Day highs will present formidable resistance just below the aforementioned June and July highs. Expect October to close that gap and test the trend line tested over the next couple of weeks. At least as often as not the post Labor Day low turns out to be the low for calendar September and October settles premium to its immediate predecessor (about 75% of the time).

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Immediate Mission Accomplished

Daily Continuous

Wanted see a test of the September expiration and got a solid run at it yesterday. Now what — explained in the Weekly section of the website what will happen either way.

Major Support: $2.47, $2.00, $1.991-$1.96, $1.795-$1.766
Minor Support $2.38-$2.26, $2.17
Major Resistance$2.83, $3.00, $3.536, 3.59

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Saw That Coming

Daily Continuous

Not like we didn’t see that decline coming — but now it gets interesting as the market still need to decline into the September expiration and then break through the support zones down to $2.47. As discussed in the Weekly, this decline may last more than just a day — so patience is a virtue in this area — let the trade indicate the move.

Major Support: $2.47, $2.00, $1.991-$1.96, $1.795-$1.766
Minor Support $2.38-$2.26, $2.17
Major Resistance$2.83, $3.00, $3.536, 3.59

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Stalls At High End of Range

Weekly Continuous

Prices reversed from a new low for September’s tenure and the soon to expire prompt had a gap higher, finding similar selling at similar levels tested earlier in the month. Before September expiration (about exactly midway between the July and August settlement values) the expiring prompt closed the gap and ended with a last two day gain. New prompt October (carrying a $.121/dt premium when September settled at $2.556) the new contract month immediately built on that premium closing on the first day of its tenure at $2.806…right in the middle of the zone of resistance between the June and July highs. October tried twice more to close above that zone (trading to highs of $2.865 and $2.860) but both times ended those trading sessions lower.

The new prompt gas is following the historical technical script fairly well. As discussed prices around Labor Day have a period of weakness on either side of the holiday. The prompt gas tends to rally to a Labor Day high before weakening immediately before or immediately following the holiday period. Most often that weakness leads to a mid – September low. The average of the declines over the last ten years is about 10%.

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Was Off Base

Daily Continuous

Well, guess I was a little off base when prices only declined to $2.647 which was well above the close and expiration of the September contract. The Labor Day trend, though, has not completed yet so perhaps the prognostication will prove relevant. Time will tell — storage release — yee haw, the gap between 5 year and this year continues to narrow but the story remains the same — we got plenty of gas in the ground. The bears have to realize that depending on forecasts and actuality, that “surplus” can disappear quickly in November. Trade wise the top of the range now is $3.00 and expect selling there.

Major Support: $2.47, $2.00, $1.991-$1.96, $1.795-$1.766
Minor Support $2.38-$2.26, $2.17
Major Resistance$2.83, $3.00, $3.536, 3.59

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September Goes Quietly

Daily Continuous

Staying within the range that September contract had developed, it went out on a quiet note towards the low end of the range it had developed. Now we have a fresh Oct contract with tropical disturbances (bearish) and the Labor Day weekend trends (bearish before/or after the holiday). Then you include my prediction in the Weekly analysis, that the new prompt would likely give up any premium it had to Sept and you have my prediction for the next two days of trade. Won’t hear from me until after the holiday.

Major Support: $2.47, $2.00, $1.991-$1.96, $1.795-$1.766
Minor Support $2.38-$2.26, $2.17
Major Resistance$2.83, $3.00, $3.536, 3.59

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Two Days Left — Range Rockin

Daily Continuation

As discussed in the Weekly area — would expect the premium afforded to the October contract to dissolve after the September contract expires. Perhaps, the premium dissipates during the expiration– we will see. From a trade perspective watch the premium vs the September movement.

Major Support: $2.47, $2.00, $1.991-$1.96, $1.795-$1.766
Minor Support $2.38-$2.26, $2.17
Major Resistance$2.83, $3.00, $3.536, 3.59

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Gas Continues Recent Behavior

Weekly Continuous

It certainly appeared that tendency was at work when September rallied to close higher for five straight days from a low of $2.457 on 08/02 up to test the March high, but there has been a different tendency during ’23, to which there has been little discussion here. The only expiring monthly contract this year that has had a semblance of a rally into expiration (a trend contrary to the trend of 2021 and 2022) was July and it lost about a quarter on its final trading day. After printing the June Q2 high on 06/28 expiring July traded an “outside” day reversal to off the board at $2.603. The others either traded the low of their tenure during the last three days before expiration (January, February, March, April, and August) or fell hard from a lower high (May $2.385 to $2.101, June $2.685 – $2.143). The last week there was too much attention to the 08/09 high volume breakout through the June/July highs. Still, despite a new low daily close ($2.486, the lowest daily continuation close since $2.485 on 06/20), trading through all those weekly lows (five between $2.457 and $2.536) and briefly through the 20 – week SMA (currently $2.471) September managed to recover enough to hold the fledgling up trend defining moving average and the trend line rising from the April – May – June lows on a daily and weekly closing basis.

Over the five Fridays of prompt September’s tenure there have been four lower weekly closes. September’s net loss since Friday 07/28 is $.167/dt September giving up its premium plus $.026 at the low daily close of its tenure. It’s not like they took September and shot it. The more interesting elements are that over those same four of five losing weeks the current one – year strip is only $.008 lower. If September is $.167 lower and the strip is only $.008 lower there must be some under the radar allowing strength to occur somewhere. As it turns out, the average of November ’23 – March ’24 is $.037 higher over the same period. Seems to me that is supporting evidence for the thesis that sponsorship for deferred and distant deferred contract months is slowly gathering. For now, there is no doubt that the trading range that confined successive prompts for all of Q2 (perhaps setting up a similar range for Q3), will continue to be the primary consideration (meaning the appropriate strategy for traders to buy weakness – sell strength). Expectations are for the October to give up whatever premium is awarded when September trades its last, but it seems reasonable to point out that every time that prompt gas has traded into the mid $2.40s since the middle of June (prompt in waiting October into the mid $2.50s) the zone on either side of $2.80 has been tested.

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Startling Response to Bullish Report

Daily Continuous

When prices don’t rally on bullish news (storage report) then you have a segment of folks lining up to keep the price low– question is — how long can they keep it suppressed before another short covering rally like two weeks ago. It is a bearish seasonal period though but running out of prompt.

Major Support: $2.47, $2.00, $1.991-$1.96, $1.795-$1.766
Minor Support $2.38-$2.26, $2.17
Major Resistance$2.83, $3.00, $3.536, 3.59

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