Author: Willis Bennett

A Breakout For the Bulls

Weekly Continuation

Fourteen of the last sixteen years prompt gas has traded through the calendar April high ($2.529 this year) during May. The remaining two Aprils (’14 and ’19) were “inside” months. Since the prompt trade remained “inside” calendar March’s extremes during April, the April low hasn’t been violated during May since ’06. With technical indicators steadily improving, a reasonable expectation was that June would trade through $2.529, and it did. On Thursday June overcame the declining moving average and conventional resistance to trade through the April high for the fifteenth time in seventeen years doing so with some pretty serious volume.

Major Support: $2.00, $1.991-$1.96, $1.795-$1.766
Minor Support: $2.50, $2.36
Major Resistance $2.543-$2.604, $2.836, $3.00, $3.536, 3.595

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Break Out to the Upside

Daily Continuous

Prices finally broke out of the recent range and closed above $2.50 for the first time since March. Yes, there was some short covering around $2.50 that propelled the move a dime high. Is this the confirmation of the historical seasonal strength in spring and early summer– not sure but a retest of the “old”resistance ($2.50) and a failure to send prices lower will be a good indicator.

Major Support: $2.00, $1.991-$1.96, $1.795-$1.766
Minor Support: $2.50, $2.36
Major Resistance $2.543-$2.604, $2.836, $3.00, $3.536, 3.595

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Nothing New

Daily Continuous

Not a lot happening so I won’t bore you with useless analysis – still a range.

Major Support: $2.00, $1.991-$1.96, $1.795-$1.766
Minor Support:
Major Resistance $2.32-$2.41, $2.543-$2.604, $2.836, $3.00, $3.536, 3.595

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Re-Run Does Not Materialize

Daily Continuous

Similar action after the Monday run but not as dramatic as previous turn-around’s. Second consecutive close above the 50 day SMA is interesting and how that plays out during the bearish storage report (so I am told by you fundamental folks) will be interesting. Continue the range trade.

Major Support: $2.00, $1.991-$1.96, $1.795-$1.766
Minor Support:
Major Resistance $2.32-$2.41, $2.543-$2.604, $2.836, $3.00, $3.536, 3.595

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Seen This Movie Before

Daily Continuation

This market behavior is similar to previous weeks as prices rally early in the week only to succumb and decline into the storage report. Is this just a repeat performance or is there a shift in market bias. The next couple of days will likely provides clues– until the definition becomes clearer — play the range and we are nearing the top end of the range.

Major Support: $2.00, $1.991-$1.96, $1.795-$1.766
Minor Support:
Major Resistance $2.32-$2.41, $2.543-$2.604, $2.836, $3.00, $3.536, 3.595

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Expect More of the Range Trade

Daily Continuation

Even with the reversal on Friday — this market is mired in a range environment for now. Go into some of the technical developments in the Weekly section– but Daily you have to continue the range trade until the market says other wise.

Major Support: $2.00, $1.991-$1.96, $1.795-$1.766
Minor Support:
Major Resistance $2.32-$2.41, $2.543-$2.604, $2.836, $3.00, $3.536, 3.595

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Some Positive Technical Developments

Weekly Continuation

Last week prompt June fell to a new contract low as it tested continuation weekly closing support between $2.035 (week ending 04/07) and $2.106 (04/14), but volume fell again, to +/- 1,600,000, close to the same as the week of the April low, indicating that the firepower to drive the prompt back through $2 was also lacking. Opening at $2.148 June traded down to $2.140, the old support level from the week ending 04/21. That early print turned out to be the low of the week, but June tried again on Friday…trading as low as$2.147, before reversing higher accompanied by the highest volume since 04/17 when the prompt traded a nearly identical range ($2.146 – $2.314 v $2.147 –$2.335). Friday’s high volume “outside” day was a positive technical event but is more symptomatic of the final throes of the construction of a low than it is predictive of a significant extension of the rally. Substantial conventional, trend line and moving average resistance.

The consistent range that has held the market for over two months, suggests that the market is trading a “base”, that will ultimately support a significant rally, while the premium that has been awarded to deferred months is steadily compressed, suggesting in the market that its indicative that “natural gas will never rally again”. This sentiment that pervades the gas market will likely be the fuel source for the upcoming rally.

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Middle of the Range

Daily Continuation

Just wallowing in the middle of the recent range, getting set up for the next bearish storage report. Here is a tip– it is going to expand the surplus over the 5-year average. Does anyone think different in the industry? Hey bears — grow some love for declines (would of used a different reference— but unprofessional).

Major Support: $2.00, $1.991-$1.96, $1.795-$1.766
Minor Support:
Major Resistance $2.32, $2.543-$2.604, $2.836, $3.00, $3.536, 3.595

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Boring

Daily Continuous

Hate to say it but the run went just short of a key resistance — failed and now we are in boring zone.

Major Support: $2.00, $1.991-$1.96, $1.795-$1.766
Minor Support:
Major Resistance $2.543-$2.604, $2.836, $3.00, $3.536, 3.595

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Headed North

Daily Continuous

Looks like prices want to test resistance after failing at extending below the support zone. A key for the move will be the 50 day SMA just over $2.32 as the market has only closed over that closely watch trend line once since last Dec.

Major Support: $2.00, $1.991-$1.96, $1.795-$1.766
Minor Support:
Major Resistance $2.543-$2.604, $2.836, $3.00, $3.536, 3.595

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