Author: Willis Bennett

It Is a Start

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My apologies for no Daily yesterday — illness limited my computer time. The trade on Monday and yesterday (more so yesterday) did take on some of the characteristics of short covering— but will have to wait until open interest and volume are final. Explaining “some” is about the volume with the open interest at key levels of resistance and/or support– which yesterday broke through the $2.50 area finally (resistance) and closed above that level. That does not suggest the market is off to the rallies — rather just an adjustment in the trader’s eyes. We will know when the short covering rally has commenced when there is a strong volume day and open interest declines.

Major Support: $2.533, $2.422, $2.238
Minor Support:
Major Resistance$3.536, 3.595, $3.63, $3.789, $4.128, $4.22-$4.39, $4.75-$4.825, $4.948

Was Wrong on the Volume

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Tuesday was a higher volume day and was matched yesterday, Now lets look at the storage release and the reaction to it. Would be a buyer on support tests, going into the football weekend,

Major Support: $2.533, $2.422, $2.238
Minor Support:
Major Resistance$3.536, 3.595, $3.63, $3.789, $4.128, $4.22-$4.39, $4.75-$4.825, $4.948

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Over-sold Reaching History

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Discuss some of the historic aspects of the declines since last fall in the Weekly section. Not going into here as well– just here to say — not sure from where but there will be a short covering rally coming up that will challenge the over-bought correction experiences from last summer and last fall. Careful through here.

Major Support: $2.533, $2.422, $2.238
Minor Support:
Major Resistance$3.536, 3.595, $3.63, $3.789, $4.128, $4.22-$4.39, $4.75-$4.825, $4.948

Bull’s Stand Aside-Humor Will Come

Weekly Continuation

Have mentioned it every week for the last three and sure you are tired of hearing the over-sold condition of the market and that there will be a substantial short covering rally coming (just trying to figure out from where). Wanted to bring it into context by looking at the most recent CFTC data but they did not update data to last Tuesday in the weekly report on Friday– so the analysis is a little late but likely the same interpretation. Take a look at the charts below: The first the Weekly Continuation with Total Open Interest and Volume and the second is the CFTC report through the latest data.

Weekly Continuation with Total Open Interest and Total Volume
Weekly Continuation with Speculative Short Position per CFTC

The ellipses hi-light the trade November 6, 2022. Total OI was at 984,593 contracts and the Speculative shorts represented 180,931 contracts of the total. Obviously, the chart shows the enormous run that the speculative shorts have brought to the market, currently sitting at 250,915 contracts (growing 69,984 contracts). Total OI has grown to 1,168,247 contracts (growing 183,654 contracts). In the recent decline in prices the speculators are responsible for nearly 40% of the recent declines. It is little wonder that warning of the upcoming short covering rally (not sure from where) has been mentioned here.

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Headed to $1.00

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Well– the RSI (weekly) jumped to the lowest level in the last decade– but some traders are irrelevant of that fact and are confirming to some that prices are headed under $2.00 — yee haw. Must admit that this level of bearishness is not to be taken lightly nor relevant to future prices — as the market is setting itself up for a significant short covering episode.

Major Support: $2.533, $2.422, $2.238
Minor Support:
Major Resistance$3.536, 3.595, $3.63, $3.789, $4.128, $4.22-$4.39, $4.75-$4.825, $4.948

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Don’t Listen To Technical Issues — Keep Selling

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That is the mantra for the speculators currently– Over-sold ??? Who cares keep selling. Have to admit one element that has been accurate three of the last four weeks is anticipating bearish storage reports beget more selling which has proven profitable on a day basis. Its been the theme for the month of January and Feb started off singing the same tune. These little tendencies are good for a quick position but would never hold over night due to the general over sold bias discussed of late. Did a look into the nature of who (segment) is selling since the Nov highs and hope to share with you over the weekend.

Major Support: 2.68, $2.533, $2.422, $2.238
Minor Support:
Major Resistance$3.536, 3.595, $3.63, $3.789, $4.128, $4.22-$4.39, $4.75-$4.825, $4.948

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A Quiet Day

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What a quiet day for natural gas yesterday, guess the bears ran into some issues is sending prices down further. Not much to say about the technical side from yesterday.

Major Support: $2.761, 2.68, $2.533, $2.422, $2.238
Minor Support:
Major Resistance$3.536, 3.595, $3.63, $3.789, $4.128, $4.22-$4.39, $4.75-$4.825, $4.948

Rally During Expiration

Daily Continuation

Was somewhat startled to see the rally on expiration– almost brought back memories of 2022 expiration’s. The rally to the close up to $3.109 but the March contract was left for dead $.25 lower. Now the market opens on Sunday night and prices are wanting to extend the declines to yet a lower low. Will not say that won’t happen, as natural gas always goes to extremes both up and down. Go into a lot of the technical considerations on the Weekly section– but due to the current condition of the bias would not be adding to bearish positions except on rallies back above $3.00.

Major Support: $2.761, 2.68, $2.533, $2.422, $2.238
Minor Support:
Major Resistance$3.536, 3.595, $3.63, $3.789, $4.128, $4.22-$4.39, $4.75-$4.825, $4.948

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Bearish Technical Indicators Continue

Weekly Continuation

Despite the rally on expiration (almost reminded me of several expiration’s last year) prices closed the week lower for the sixth consecutive week– clearly a bearish indicator for the week coming. Along with that expiration, March did not follow the gains rather, closing the week $.25 below the expiration of February.

Early indications have the week gaining open interest (even with expiration) with gains in volume week over week. The losses do come with an RSI reading that is in the extreme zone (chart below is after the Sunday opening).

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Feb Contract Going Into Free Fall

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Prices just continue to press lower — which is great for some — for me I cleared my shorts on the failure of the rally on Monday. Left a few chips on the table — but I sleep well. Got no clue where this is going to decline down to but, as mentioned yesterday, lots of folks are on one side of this boat and I am not one of them. Will be out of internet service tomorrow so there will be no Daily for Friday.

Major Support: $3.18-$3.09, $3.00
Minor Support:
Major Resistance$3.536 –$3.63, $3.789, $4.22-$4.39, $4.75-$4.825, $4.948, $5.056