Author: Willis Bennett

Weekly Continuous

New prompt January, the premium for which had diminished to $.061 (versus $.163 a week ago) reversed higher from a December expiration day low of $4.390 to trade the high for calendar November on the last trading day of the month. This was the second straight calendar month to do so. This week’s close was the highest continuation close since the Friday before Christmas in 2022 and the highest close for prompt January since mid – July (07/18, $4.850 v $4.870, the continuation close that day was $3.565, a timely illustration of how deferred month premium dissipates). 2,013,263 contracts traded that week in July, an estimated 2,218,448 during the past holiday shortened week, which suggests that the high traded during week ending 07/18 ($5.018) is likely to severely tested.

The consensus of technical indicators remains neutral but with an improving price positive bias. The improvement in the “bias” was attributable to an increase, in open interest, the first week over week increase since week ending 10/17 . The primary reason that the consensus steadfastly refuses to reach positive agreement is the severely overbought condition. The weekly RSI has remained well into its historical extreme zone for four weeks. That historically dependable mathematical extreme combined with prompt gas ending five straight weeks more than two standard deviations above the 20 – weeks SMA and is now 37% above the 40 – weeks SMA is not, adding significantly to length. Without a substantial retracement of gains from the October low be patient and seek a correction to add to positions.

I am traveling for the holiday and I can’t get access this afternoon for my charts so please be aware. I will try to update the charts today and publish them on the website. Due to some limitations, I doubt there will be a Daily on Wednesday continuing through the weekend.

Comments on the price movement last week and going forward through the expiration this week;

Weekly Continuous

The gains continued last week, the decline in open interest…indicating substantial short covering was a significant contributor to the rally, discussed in some detail last week, continued. Until an increase on Thursday, only the second daily increase since 10/16, the total number of contracts outstanding had fallen for ten straight days. Prompt gas closed higher on 13 of those 20 trading days and only once was there consecutive lower daily closes (three straight between 10/22 and 10/24).

The decline to Wednesday’s low total of contracts outstanding brings the reduction to 200,007 contracts (11.6%) while including a significant contribution from the premium of December over expired November ($.439) prompt gas has rallied, on a daily closing basis, from $2.938 to $4.533 ($1.595 or 54.3%). This represents an epic short covering rally.