Author: Willis Bennett

Consolidation After Steep Declines

Daily Continuation

After last week’s rapid declines– the market seems to be developing a “consolidation” pattern at the lows but the declines may return. Not sure what the fundamental folks are tracking with the loss of demand and the loss of production due to the storm. That will play out next week. In the meantime play the historical trends and the range of the last week.

Major Support:, $1.52-$1.511, $1.481, $1.312
Minor Support : $2.41-$2.31, $2.168, $2.12, $2.00, $1.967- $1.94
Major Resistance: $2.44-$$2.502, $2.618, $3.00, $3.16

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Found an Initial Bounce

Daily Continuous

Was expecting some sort of slight bounce off of the declines last week and perhaps we got the the initial yesterday with the gains. Curious as to the demand destruction versus the shut-ins struggle for the traders with the storm– it is likely we will see it in the next day or two.

Major Support:, $1.52-$1.511, $1.481, $1.312
Minor Support : $2.41-$2.31, $2.168, $2.12, $2.00, $1.967- $1.94
Major Resistance: $2.44-$$2.502, $2.618, $3.00, $3.16

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That Is a Bearish July 4th Trade

Weekly Continuous

The case was made that conventional and moving average support would provide a floor for the historically consistent price decline bracketing Independence Day — to say the least –it didn’t. Since a day before July went off the board (06/25) amply offered August gas has closed lower for eight straight days. Add to that, the prompt plus the last two of July’s, and at Friday’s low retraced 50% of the rally from the March Q1 low to the June Q2 high.

The historical averages for the seasonal decline (per the chart provided previously) were: 20 years, 16.4%, 10 years, 13.5%, 5 years 13.7%. The following is an update summarizing the recent declines and the results:

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Where Be the Support

Daily Continuous

That was a weak week as prices declined each and every day — not were headed near the extreme area on the RSI chart, as discussed in the Weekly section. How far it goes is anyone’s guess but this will be a key week. The open last night was weaker but found some support off of the opening– but we will see when the demand and supply effects from the hurricane hit the market.

Major Support:, $1.52-$1.511, $1.481, $1.312
Minor Support : $2.41-$2.31, $2.168, $2.12, $2.00, $1.967- $1.94
Major Resistance: $2.44-$$2.502, $2.618, $3.00, $3.16

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Continue to Expand The Support Area

Daily Continuous

First off let me wish you all a wonderful weekend celebrating July 4th. I say weekend because this will be my last Daily until July 8th. Not much to say as prices continue to search for the low end of the range for the August contract. It will form and use that as a base for the rest of the month– whether or not it is the Q3 low is a different question.

Major Support:, $1.52-$1.511, $1.481, $1.312
Minor Support : $2.64, $2.448, $2.168, $2.12, $2.00, $1.967- $1.94
Major Resistance: $3.00, $3.16

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Wasting No Time

Daily Continuous

Per my comments yesterday — it seems the market is going to waste no time in testing and finding the support zones for the near term. The Cross-over has now occurred with the 50 day trading over the 200 day — will be interesting to see if the trade even cares or notices.

Major Support:, $1.595, $1.52-$1.511, $1.481, $1.312
Minor Support : $2.448, $2.168, $2.12, $2.00, $1.967- $1.94
Major Resistance: $2.64, $3.00, $3.16

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Soft Weekly Close — Key Cross-Overs Coming

Daily Continuation

Prices closed the week on the August lows and concluded that the Q2 high was confirmed with the double top ( July Contract) discussed previously. We are headed into a historically weak period of the year (Q3 lows) that have been discussed here for several years. Brought to attention some of the issues and ancillary technical problems that could effect the market in the coming months in the Weekly section. The market has placed itself at a important level and now will need to define the key support for the coming month.

Major Support:, $1.595, $1.52-$1.511, $1.481, $1.312
Minor Support : $2.64, $2.448, $2.168, $2.12, $2.00, $1.967- $1.94
Major Resistance: $3.00, $3.16

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August As Prompt Within the Continuous Range

August Spot Contract

Prompt August, which had already closed below a short/intermediate – term trend line got off to an inauspicious beginning. On its first day August closed below its 50 – day SMA that it had closed above each day since May 3rd. On its second day the new prompt traded through its to date June low ($2.656 on 06/04) and then its post – Memorial Day low ($2.605 on 05/31)…and settled for the week below both of those of those lows. It is hard to put a bullish spin on that but there are a few mitigating factors. One element that should be made clear is that the behavior last week (and month) did provide an interesting range for the upcoming August contract as shown above. Similar to the July contract, there is a nice double top and now a solid test of the support zone is developing. Expect this range, which falls nicely into the range the market has maintained this spring (Continuous basis).

Weekly Continuous

The expectation was that the expiration process would continue the trend of being well offered and test the major support zone ($2.60-$2.50). It did not quite make it (the expiration day low was $2.613), before settling not so much higher at $2.628 ( a $.135/dt than June). From a technical perspective- prompt gas did test the wider zone of support between +/-$2.450 and $2.640, which included 50% and 61.8% retracement of the rally from its February low and August continued to test that zone after July was off the board.

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The Premium For August Diminishes

Daily Continuous

Prices continued to decline and almost got to the expiration price of July gas before finding support and finding some gains. Need to watch how prices behave in the next day or two. The weekly expiration will provide us some indication as to bias.

Major Support:, $1.595, $1.52-$1.511, $1.481, $1.312
Minor Support : $2.64, $2.448, $2.168, $2.12, $2.00, $1.967- $1.94
Major Resistance: $3.00, $3.16

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Expiration Trend Continues

Daily Continuous

No surprise here– have discussed it in the Daily and Weekly sections about the previous monthly expiration’s to be well – offered into expiration and to expect the same behavior until it doesn’t. Sure enough the July process was very similar to the previous months– but now we have to wonder about the premium afforded the August contract and the early morning trade may provide some clues.

Major Support:, $1.595, $1.52-$1.511, $1.481, $1.312
Minor Support : $2.64, $2.448, $2.168, $2.12, $2.00, $1.967- $1.94
Major Resistance: $3.00, $3.16

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