Author: Willis Bennett

Churn and Burn

Daily Continuous

What can I say about consolidation and declining range trade. Go back a couple of years and read the diatribes of the range bound boring market then. This time feels a little different for both directions and it will be interesting to witness. From the trade perspective (perhaps not daily) is playing the ranges.

Major Support: $2.00, $1.795-$1.766
Minor Support: $2.41- $2.34
Major Resistance$2.836, $3.00, $3.536, 3.595

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Rebound Off Support

Daily Continuous

Prices rallied off of a test of support and continue in the recent range. Would expect this behavior to continue until some element of the supply/demand balance changes. Continue to trade the range near term.

Major Support: $2.00, $1.795-$1.766
Minor Support: $2.41- $2.34
Major Resistance$2.836, $3.00, $3.536, 3.595

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Declines Test Strong Support Zones

Weekly Continuous

Prices tested and gave up gains as prices tested the moving Avg on the week before. As long as these moving averages are declining, they will provide inviting, low risk sell opportunities, just as they provided similar opportunities during the uptrend last year. Given the dramatic reaction to last week’s first approach I’d guess it will take an extended period of consolidation allowing time for the slope of the declining resistance to lessen and for the construction of a base sufficient to support more than a one or two week rally (higher closes for the last two weeks were the first consecutive higher weekly closes since the first two Fridays of December) toward a traditional spring/summer high…and there is still that requirement that prompt gas find support at a higher low.

Market internals faded to neutral last week after showing at least tepid support for a price recovery in mid/late February. This week average daily volume increased as prompt gas fell and open interest resumed adding contracts after a one week decline (the 13th increase in 14 weeks). A price negative bias was added to both. Volume declined minimally from the previous week.

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Prices Seem to Test Key Support

Daily Continuous

Sunday night prices were weaker, extending the trade bias late last week. This decline should establish a higher low from last month and then should continue to build a base from which to move towards the spring/early summer rally.

Major Support: $2.00, $1.795-$1.766
Minor Support: $2.41- $2.34
Major Resistance$2.836, $3.00, $3.536, 3.595

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Testing Support Zones Hoped For

Daily Continuous

Have been looking for a serious test of support zones after last week’s continuous gains in price — largely due to late shorts getting gutted. As discussed in the Weekly section this past weekend, the gains last week were primarily fueled by open interest declines hence short covering. Now the bears seek to control the movement by once again establishing new lows. In the Weekly section, there was a discussion of how the market seemed to be sending a message that perhaps a near term significant low had been achieved, now a base for a Q2 rally was in place. We will get this hypothesis confirmed or rebuked in the coming days. The market will be defining its intentions shortly.

Major Support: $2.00, $1.795-$1.766
Minor Support: $2.41- $2.34
Major Resistance$2.836, $3.00, $3.536, 3.595

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Quiet Day

Daily Continuous

After the big drop on Monday — selling slowed yesterday. Perhaps we are going to develop a range for trade near term — the rest of the week will define. I have received some news regarding family that will keep me from publishing the Daily tomorrow. If it is the range concept — would be a seller above $3.00 prompt and a buyer below $2.60.

Major Support: $2.00, $1.795-$1.766
Minor Support: $2.41- $2.34
Major Resistance$2.836, $3.00, $3.536, 3.595

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Natural Gas Wastes Little Time

Daily Continuation

Prices from the start on Sunday night collapsed down to an initial support level at $2.70 leaving little doubt as to coming test of the resistance area from Feb trade. Trade started to find less sellers, testing the historically significant January low,$2.612. Finally breaking below to test the the highs of weeks ending 02/10, 17 and 24 were between $2.577 and $2.657, and two of the three weekly closes were between $2.504 and $2.580. Time will tell if this area holds — but this is the type of decline I was discussing last week. My initial thoughts were the test would occur this week but natty wasted no time in achieving this expectation.

Major Support: $2.00, $1.795-$1.766
Minor Support: $2.41- $2.34
Major Resistance$2.836, $3.00, $3.536, 3.595

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Bullish Move But Caution

Weekly Continuation

Prompt gas finished higher for a second week and the third time in the last four. Consecutive higher weekly closes have not occurred since the rally from the October low and prompt gas had not been higher in three of four weeks since the portion of the rally to the August high. Those rallies failed but failure currently will just test support zones not the declines we saw in the fall (sorry — don’t see prices to zero).

Weekly charts give useful information for purposes of hedging and term positioning vs Daily charts which are quick snapshots of what short term actions are coming. For an intermediate/long – term perspective the monthly charts are invaluable for filtering out distracting trading “noise”. For example, the June ’21 breakout through the Q4 ’20 high was an ominous warning of an extended period of higher prices. Last summer there was a warning of a different type, this one in the form of an extremely rare monthly event which was back to back “outside” months during calendar June and July (it is unusual if that occurs on a weekly basis at the least). That event was noted at the time along with a discussion about weekly volatility. Rare monthly events always send a message. The market may have sent another one by the price change during February.

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Bullish Weekly Close

Daily Continuous

Detail the bullish break that occurred last week in the Weekly section, but for the Daily I can only submit that the bullish close and the higher close and the technical damage would support higher prices this week but the initial phase Sunday night has prices lower by $.27– granted on thin trade. The market has declined from just below $2.00 and has rallied 50% in just over a week of trade (8 trading days)– so it is likely there will be an additional consolidation process coming this week. Look for a decline to the area that was resistance around $2.53.

Major Support: $2.00, $1.795-$1.766
Minor Support: $2.53, $2.41- $2.34
Major Resistance$2.836, $3.00, $3.536, 3.595

Price Consolidation ?

Daily Continuation

I have been expecting the bears to make a push against the gains and formulate a decline to support– May have been all wrong and the market is consolidating the gains from expiration this week– potentially setting up additional gains. The storage report was bearish (as expected) compared to the averages and last year– but the market hardly flinched. Going to work the support levels for a consolidation phase going into next week – stops tight as not totally committed to the theory.

Major Support: $2.00, $1.795-$1.766
Minor Support: $2.41- $2.34
Major Resistance$2.836, $3.00, $3.536, 3.595

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