Author: Willis Bennett

Nov Well Bid Into Expiration

Weekly Continuous with Volume

After selling lower prices could not far enough to close the gap from the Sept 28th expiration low and gap ($2.781 – $2.820), soon to expire November flipped, rallied, and filled the gap on the high end from the previous week and then extended the rally another +/-$.20 before fading into expiration. Even with the decline from $3.401 to settle at $3.164 November went off the board $.265 above last week’s close and at the highest contract settlement value since January ’23 at $4.709 in Dec ’22.

Mentioned in the Daily and Weekly reports of the tendency for prices to return to test the breakout level of support (resistance once violated becomes support if the breakout is valid). Prompt gas followed that technical script closely, but while that was going on November remained confined in a range it had created and discussed last week, trading between $2.825 and $3.485. Just before October expiration November tested the lower boundary of that zone. Two weeks after that successful test it tested the upper boundary of that range (trading to $3.471- just short of its August high. The Nov prompt’s strong rally into expiration, a very rare event in 2023, fell well short of that upper boundary $2.401 vs $2.471, and the settlement at $3.164 was just about midway within that range.

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Dec Takes Over As Prompt

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We now get a flavor for December leading the charge of trade. The weakness from Friday in Dec seems to be brought over to late Sunday trade. As mentioned in the Weekly section, the expectation for some of the gap from the expiration trade and the Dec trade should be challenged. The $3.164 expiration of Nov will provide a key near term zone.

Major Support: $2.98-$3.03, $2.82-$2.78, $2.74, $2.608, $2.47, $2.00, $1.991-$1.96, $1.795-$1.766
Minor Support $3.16, $2.84, $2.38-$2.26, $2.17
Major Resistance $3.42-$3.48, $3.536, 3.59, $3.65

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Storage Report Provides Volatility

Daily Continuous

I suggested earlier in the week that the range trade issue might need the storage report to provide bias. What was surprising, was the bearish report providing the reason for a bullish run? Not sure what that is all about but if you are waiting to buy — be cautious as the Dec contract did not rally equal to the Nov run and the difference between Dec and Nov declined to a low of $.25 (the lowest of the year) suggesting that the move in Nov is not an indication of upcoming winter prices. That will get further definition as the Dec takes over as prompt.

Major Support: $2.82-$2.78, $2.74, $2.608, $2.47, $2.00, $1.991-$1.96, $1.795-$1.766
Minor Support $2.84, $2.38-$2.26, $2.17
Major Resistance $3.185, $3.42-$3.48, $3.536, 3.59

Just Can’t Muster the Commitment

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So close to both ends of the range trade but prices don’t have the commitment to break through either direction. Perhaps — this will lead to anther calm expiration but you never know with options expiring on the storage report this Thursday. That event may lead to some volatility, because this market, currently, is not showing any bias direction.

Major Support: $2.82-$2.78, $2.74, $2.608, $2.47, $2.00, $1.991-$1.96, $1.795-$1.766
Minor Support $2.84, $2.38-$2.26, $2.17
Major Resistance $3.00, $3.185, $3.42-$3.48, $3.536, 3.59

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Consolidation At Low End of Range

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Prices spent yesterday trading in a less that $.10 range which the market may be signalling a consolidation period while it absorbs the large losses in the past 6 trading days (nearly $.50). As discussed in the Weekly section, prompt month is not my center of focus, but rather the December contract and the hefty premium to Nov contract that it currently enjoys.

Major Support: $2.82-$2.78, $2.74, $2.608, $2.47, $2.00, $1.991-$1.96, $1.795-$1.766
Minor Support $2.84, $2.38-$2.26, $2.17
Major Resistance $3.00, $3.185, $3.42-$3.48, $3.536, 3.59

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Starting To Evaluate Length

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With prices gaping lower last week, prices were destined to challenge support levels from the summer. Discussed the week’s action and the ramifications, in the Weekly section and now this week we will look at the expiration of the Nov contract. Guesses suggest that a range has developed between the two gaps but the gaps also provides great targets. Generally, there remains a bullish bias to trend as there are a series of higher lows with higher highs– but the December premium gives me pause for serious length.

Major Support: $2.82-$2.78, $2.74, $2.608, $2.47, $2.00, $1.991-$1.96, $1.795-$1.766
Minor Support $2.84, $2.38-$2.26, $2.17
Major Resistance $3.00, $3.185, $3.42-$3.48, $3.536, 3.59

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Break Out Support Zone Breached

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The break down through the break out zone can not be understated from a technical standpoint. The question becomes does the decline continue to test the gap from the expiration or does support commence before.

Major Support: $2.82-$2.78, $2.74, $2.608, $2.47, $2.00, $1.991-$1.96, $1.795-$1.766
Minor Support $2.99, $2.84, $2.38-$2.26, $2.17
Major Resistance $3.42-$3.48, $3.536, 3.59

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Shrinking Range Continues

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Not a lot to add to from yesterday, except the declines yesterday occurred on low volume after the price rallied in the early trade. Would play the range into the storage report.

Major Support: $2.608, $2.47, $2.00, $1.991-$1.96, $1.795-$1.766
Minor Support $3.04-$3.028, $2.99, $2.84, $2.38-$2.26, $2.17
Major Resistance $3.42-$3.48, $3.536, 3.59

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Similar Activity

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Similar to the previous months, prices moved in a direction tested the support or resistance then spent some days in a consolidation pattern deciding the next directional bias. We shall see what happens this month as prices seem to be consolidation just above the support break out area.

Major Support: $2.608, $2.47, $2.00, $1.991-$1.96, $1.795-$1.766
Minor Support $3.04-$3.028, $2.99, $2.84, $2.38-$2.26, $2.17
Major Resistance $3.42-$3.48, $3.536, 3.59

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Solid Initial Test

Daily Continuous

As expected, prices tested the high end of the break out zone from last week. From that test, the price action set up a small rally to settle over $3.10. The market should continue to test the lows and provide good low risk opportunities to enter the market with low risk stop areas.

Major Support: $2.608, $2.47, $2.00, $1.991-$1.96, $1.795-$1.766
Minor Support $3.04-$3.028, $2.99, $2.84, $2.38-$2.26, $2.17
Major Resistance $3.42-$3.48, $3.536, 3.59

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