Author: Willis Bennett

Prices Decline Well Short of Gap

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Weakness prevailed but the declines fell short of serious tests of the support provided by the expiration gap. This week should continue to provide clues as to the gap and the term of its existence.

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, $2.99-$3.00, $3.536, 3.59

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Does the Gap Close?

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Go into the expiration of the Oct contract and expectations on the upcoming month in the Weekly section. From a daily standpoint — would expect the expiration gap to be challenged during the coming week. This will likely set up the lower end for the Nov range of prices.

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, $2.99-$3.00, $3.536, 3.59

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Headed To Bias Determination

Weekly Continuous

One of the most significant changes that the market provided was that October was bid into expiration and it has been months since we have seen that. After closing lower on Monday the expiring prompt reversed higher, on with pretty decent volume, and went off the board at $2.764, which was $.19/dt higher than September and the highest monthly settlement since February at $3.109. Settlement was notably still below the resistance defined by the June/July highs (the pre settlement high was $2.781), but premiums afforded November quickly changed that.

I spoke, recently, about the premium awarded November had fallen from a historically generous $.502 on 08/15 to $.242. When October went off the board that premium had been further reduced to $.135 ($2.764 v $2.899) which is more in line with the traditional norm but still more than enough to leave the expected “expiration gap” ($2.781 – $2.868) . Continuation resistance ( March and August highs $3.018 – $3.027) proved too much to overcome and now the September high ($2.997) has been added to the formidable resistance zone. The gains left the calendar September close $.165/dt better than the August close and the highest calendar month close since December and Q4 ’22 ended at $4.430.

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Premium Suppressed

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I guess I should lighten the suppression comment to “narrowed slightly”. Not much else to say versus the Weekly expectations published last weekend.

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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Nothing Changes

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Nothing has changed from my Daily and Weekly comments yesterday.

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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Large Premium In Nov Over Oct

Weekly Continuous

Prompt Oct remained in the same range October gas opened a little lower ($2.624 v $2.644) and closed a little lower ($2.637, minus $.007). In between there were a couple of tests of support (Monday’s low was $2.600, the value of the trend line rising from the April/May/June lows was $2.598 and another failed test of resistance. October traded an “outside” day reversal after the first test of the rising trend line with increased volume then followed through to the upside, trading a new high for its tenure as prompt ($2.872 v $2.865 on 08/31). The now soon to expire prompt managed to post a new high daily close then that was all she wrote as October gave up the two day gain falling to a new low for the week $2.595 before Friday’s recovery to close at $2.637, a little more than a penny below the continuation 50 – day SMA.

November gave up more (-$.053) as did December (- $.048) and the winter ’23 – ’24 strip (- $.041…a new low close). November has defined its own trading range since late March…+/-$2.825 – $3.300 but this week’s lowest close in 2+ years suggests that the lower boundary of that range nearly corresponds to the upper boundary of the continuation range, is likely to be in for a severe test. Have discussed the possibility/likelihood of November being taken into the extended continuation range and continues to warrant a serious mention. A close below $2.825 increases that likelihood to a probability. November is still awarded $.242/dt premium over October but since its peak on 08/15 that premium has been reduced by half ($.239 v $.502).

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October Lives For Three Days

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Not much to say about the last three days of the Oct prompt contract life outside of the range that contracts have maintained all summer. Weakness has been the trend of the expiration’s this year so would think there should be some this month as well. Nov has a serious premium discussed in the Weekly section and it is likely that Nov will be brought into the recent range.

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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Guesses

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Any guesses as to what I will be doing as the market challenges to low side of the summer trading range?

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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Market Winding Tighter In Range

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Seems to me that this is starting to feel like a market that is winding its way to an issue. When I was a kid (few days ago) we used to have balsa woods plane that you would wind the rubber band up so tight and throw it in the air- releasing the rubber band to power the plane. This market is behaving the same way as the range gets tighter and tighter within the larger range — something is going to give. Whether the plane takes off or crashes into the lawn and the band breaks is unknown. Stick with the range trade but start to lighten up on selling premium.

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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What To Make

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What are we to make of that move on little fundamental support out side of the energy complex of commodities. Doubt this will hold over night as the light trade of the after market will find sellers seeking the $2.80’s. It does nothing to the directional bias (range trade between $3.00-$2.50) that has held for the summer.

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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