Author: Willis Bennett

Declines Hitting Extreme Area

Daily Continuation

The dramatic declines of the last few days, have left prices entering the extreme zone of over sold. Not saying it can’t decline more — just warning that additional declines are likely to to be short in extensions (see Weekly section). Would allow for the rebound that will be coming, at some point, before entering new short positions.

Major Support: $3.638
Minor Support:
Major Resistance$4.22-$4.39, $4.75-$4.825, $4.948, $5.056

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Declines Continue — Approaching Unsustainable

Daily Continuous

As a trader, the cliff that the market has fallen off of is impressive (see chart) but also not sustainable over the near term as the market clearly is approaching extreme over sold levels. Having profited nicely on these declines, greed usually catches me under-prepared and over-confident. RSI indicators on both the weekly and daily charts are entering extreme zones and the weekly chart is now trading over 2 standard deviations below the 20 week moving average– all warning signs that it may be time to take profits as I doubt they will be giving gas away free in the current year.

Major Support: $3.638
Minor Support:
Major Resistance$4.22-$4.39, $4.75-$4.825, $4.948, $5.056

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Prices Rebound Off 2021 Lows

Daily Continuous

As mentioned in the Tuesday Daily, prices seemed destined to test some of the lows from December ’21 and that is what they did, but instead of collapsing further, they found a bid. Yesterday, they chose to rally back to $4.22 (still well short of where they were last Friday). All I can and will continue to say is the important historical tendencies of early January trade to prices for the mid-term (see numerous posts from last week and the Weekly section currently). Is the low being established? no clue– but will respect the indications of trade behavior.

Major Support: $4.149, $3.638
Minor Support:
Major Resistance$4.22-$4.39, $4.75-$4.825, $4.948, $5.056

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Back To 2021 December Lows

Daily Continuation

Check the Weekly section but the declines have been extended from last week in the early trade last night. Results will be proven later but the market is hitting the extreme zones on the over – sold levels.

Major Support: $4.378, $4.34,-$4.149, $3.638
Minor Support:
Major Resistance 4.75-$4.825, $4.948, $5.056

Declines Break Testing Two Year Support

The warming weather trends last week took prices down to test levels of support that have not occurred since a year ago. As discussed last week the market has a tendency to develop a key level around the 1st of January.

…late December/early January highs or lows have consistently been disproportionately important going forward into each new year.

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Daily Continuation

My good friend and phenomenal technical / history analyst provided me with the following (take from it what you will):

THE “JANUARY PHENOMENON”.

Almost since the beginning of recorded time (which in natural gas trading for convenience begins in December ’91 – January ’92 although trading at the NYMEX first began in April of ’90), late December/early January highs or lows have consistently been disproportionally important going forward into each new year.

To summarize…of those 31 years (since ’92):

Twenty – two have begun with a gap (although a couple of those times the gap occurred during the last or next to last trading day of the previous year).

In seven of the thirty – one years (five of which began with a gap) the high of the year traded during January, most often during the first week.

In seven of the thirty – one years (five of which began with a gap) the low of the year traded during January, most often during the first week.

In the other seventeen years, twelve of which began with a gap, either the high or low for January would not be violated for a period of months. If the gas market was rising the January low presented substantial support well into the New Year. If the gas market was falling the January high was substantial resistance. While nothing is always in the gas market, whichever is first violated (the January high or low) sets the direction of gas prices for an extended period.

Over the last five years the January low has been the low of the year twice…in ’21 and ’22. The January high was the high of 2019. In ’20 the January high was not exceeded until August, in ’18 not until November.

Expect a significant high or low to occur between January expiration and mid – January

Collapse Take Prices to Nov Lows

Daily Continuous

Declines took prices down to and below the calendar Nov lows (clearly bearish) but did not close below and then recovered after the primary market close. Not sure if were going to test the October lows on this collapse but it is likely to occur (perhaps at the first of the year— see Weekly history comments). I apologize for missing the Daily yesterday — but that will not be the only occurrence for the rest of the month as I am traveling and celebrating the season. I will try to do my best but……..

Major Support: $5.61-$5.44, $4.716, $4.705-$4.68
Minor Support: $5.47, $5.337
Major Resistance$6.18-$6.29, $6.687, $7.038 $7.19-$7.221, $7.42, $7.532, $7.60-7.75, 8.021

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Big Gap Open Only to Fail

Weekly Continuous

Follow through buying took the prompt to $7.058 before a reversal lower. Another one on Tuesday in the opposite direction set the week’s high at $7.105 testing the resistance from the intersection of the 20 – week SMA and the still rising 40 – week SMA. From those levels, prices immediately retraced and closed the gap from Monday and closed the week in the middle of the range.

The results left prompt January $.355 higher, but examination of individual monthly gains in the winter prices, showed an interesting divergence. Weekly gains of February were over $.20 except for March. Sandwiched between February’s + $.221 and April’s +$.229 was March at +$.037. Chances are (guesses really) are that difference was a result of substantial buying of January and February while simultaneously selling March– sometimes referred to as a near – term bull spread. Building length in the remaining winter while offsetting that length in March. With strong volume in that spreading would indicate that folks are expecting additional winter strength in early 2023.

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Another Big Gap– This Time Down

Daily Continuous

First down , then up, now this week down– lots of gapping going on. The wonderful world of trading temps and changing forecasts. That said, there is no gap in the charts as the low last Friday $6.219 and the high last night was $6.23 but there is a substantial gap from where the last trade was on Friday (guess they were expecting cold forecasts). Oh well, still in the range and just waiting for folks to play during the Holiday week. Stick to the ranges discussed for the last month or so and be sure to read the Weekly

Major Support: $6.39, $5.61-$5.44, $4.716, $4.705-$4.68
Minor Support: $6.18, $5.47, $5.337
Major Resistance$6.687, $7.038 $7.19-$7.221, $7.42, $7.532, $7.60-7.75, 8.021

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Prices Look to Challenge Support

Daily Continuous

Prices held firmish on the close but it also looked like the market is not comfortable being above $7.00. The action held that area for a while yesterday — but then relented and in the post market extended downward and continue to tonight. Technical indications say nothing has changed from yesterday (high side middle of the range). Talking to fundamental traders, cash prices have been firming (not talking CA which has been above $30) of late with the cold weather coming. Will be interesting to see if cash leads the NYMEX which has not been a common occurrence of late.

Major Support: $6.39, $5.61-$5.44, $4.716, $4.705-$4.68
Minor Support: $6.18, $5.47, $5.337
Major Resistance$6.687, $7.038 $7.19-$7.221, $7.42, $7.532, $7.60-7.75, 8.021

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