Author: Willis Bennett

EXPIRATION WEEK

Weekly Continuous

I will be honest with you when I started to write the Weekly report I had just enjoying the Denver Broncos efforts in loosing the AFC championship game (no I did not go rather my daughter and son -in – law wanted to witness the game), so I sat and started to this only to witness a moment in trading I had not in years (Hurricane Katrina comes to immediate mind) so I broke off continuing and decided to wait to publish today (Tuesday) after the fireworks were done and trading resumed – if it did. You now know why I try not to trade the expiration of a contract and mentioned last week that, I would not be trading the Feb contract and sticking with the March prompt. The following was what I was going to start the Weekly with before the abortion.

On last Thursday, after surging $2.293 from last week’s closing price (including a gap between $3.230 – $3.380), February traded through the December high. Prompt gas trading through the calendar December high during January is not all that unusual, prompt February has done that in three of the last four years. What is unusual is doing that after trading to and through the December low (technically considered an outside month). Since organized trading of natural gas began during the spring of 1990 that has happened exactly ONCE before…in January ’24 and the reversal was in the opposite direction.

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Weather Driven Short Squeeze Continues

Daily Continuous

Wow– prices started to challenge the highs from December in the after market last evening climbing up to $5.345 where the highs from December were $5.496. A client asked how long will this continue – my response was “as long as the forecasts remain this bullish and there remains a significant short interest in the market”. According to the CME website-volume from Monday and Tuesday hit 1.52 million contracts and open interest fell 40,000+ contracts. The Tuesday trade will likely maintain a similar trend for those two elements.

All this buying has the market approaching slightly over bought status. While the RSI has some room left to rally the price run has challenged two standard deviation over the 20 week SMA (see chart below).

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Gap Starts Trade Week

Daily Continuous

A distinctly negative bias at the end of last week, reversed quickly yesterday based on a significant modification to weather forecasts creating a technical reversal higher. Discuss some of the ramifications in the Weekly section, but the market has now extended the action I expected this week. Still a negative bias but the market will have to take a couple days and trader’s interpretation to gather support for further gains.

Major Support: $3.16-$3.148, $3.136-$3.024, $2.93
Minor Support/Resistance :
Major Resistance: $3.372, $3.467, $3.554, $3.787-$3.831, $4.063, $4.086

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Lower Low Established

Weekly Continuation

On the previous Friday (01/09) February fell $.238 while 1,084,681 contracts changed hands and open interest increased an extraordinary 53,147 contracts. The only explanation, characteristic of such extremes in market internals, is overly enthusiastic speculative short selling. On Monday the late coming short sellers were taken to the woodshed. With February gaining $.240 nearly Friday’s loss, open interest fell 37,369. On Tuesday as the prompt traded the week’s high but faded to a gain of only a penny the total number of contracts outstanding fell another 7,515. Once that bloodletting (buying to cover ill – timed shorts) was complete February suffered a $.299 loss and began the expected decline toward establishing a lower low and testing support bracketing $3.

Weather forecasts over the weekend turned dramatically bullish and the bullishness left a gap in the Holiday trade (expect that gap to be tested when forecasts modify). Prices rallied up to the 100 day SMA before backing off. Would expect that was fueled by short covering after last week’s declines.

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It Was A Lower High?

Daily Continuous

There was a lower high with yesterday’s trade, but I would of liked a test of $3.55-$3.60 as a solid lower high before the collapse of the gains sending price to a lower low. Guess the storage release has a bearish bias. Lower targets have not changed from the beginning of the week.

Major Support: $3.16-$3.148, $3.136-$3.024, $2.93
Minor Support/Resistance :
Major Resistance: $3.372, $3.467, $3.554, $3.787-$3.831, $4.063, $4.086

Perhaps Setting a Lower High

Daily Continuous

Suggested in the Weekly section last week that the declines could go straight down but I urged a more structured decline though the process of trading a lower low followed by brief rallies to set a lower high. Looks like this process may be taking establishing this approach.

Major Support: $3.16-$3.148, $3.136-$3.024, $2.93
Minor Support/Resistance :
Major Resistance: $3.372, $3.467, $3.554, $3.787-$3.831, $4.063, $4.086

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Bearish Bias Likely to Continue

Weekly Continuous

Prompt gas traded to a gap lower to begin the trading year on the second trading day of 2026. February managed to fill that gap after testing rising trend line support (from the August – September – October lows), but could not rally further than the violated continuation 40 – weeks SMA and last week’s close before reversing lower. February’s second test of rising trend line support was a resounding failure-the prompt plunged to the lowest price in eleven weeks, and did so with a substantial increase in average daily volume and open interest.

Looking to test the long – term defining uptrend line drawn from the ’24 – ’25 lows would occur coincident with maturity of the short – intermediate term cycle (and the anniversary of the March ’25 price spike) in mid – March. The current value of the slowly rising trend line is +/- $2.930. The current value of the March contract is currently $.535 discount to the prompt, and is well below that support zone. March is currently testing the continuation August low ($2.622 v $2.634, March’s 01/09 close).

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Bearish Bias Rocks On

Daily Continuous

Define the technical aspect of the price movements last week in the Weekly section. Let me summarize – Bearish Bias and likely to continue though declines may not be quick follow the concept of lower lows and lower highs.

Major Support: $3.16-$3.148, $3.136-$3.024, $2.93
Minor Support/Resistance :
Major Resistance: $3.372, $3.467, $3.554, $3.787-$3.831, $4.063, $4.086

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Testing the Support Zone

Daily Continuous

Mentioned in the Weekly section that prices seemed to be destined to check the support zones in the near future. Welcome to the near future as prices melted down to set a lower low but had a brief rally by the end of the day. Market seems to looking at fundamental data coming out at the storage release to add to the bearish bias.

Major Support: $3.57-$3.546, $3.334,$3.16-$3.148
Minor Support/Resistance : $3.489,$3.467
Major Resistance: $3.787-$3.831, $4.063, $4.086

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