Author: Willis Bennett

Historical Weakness in Early Dec Continues

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Discussed yesterday about the history of calendar Dec trade and opening with weakness. That history continued with yesterday’s action and now the market will need to define the low side of the Jan contract in the coming days. From a trade perspective, would cautiously enter length on key areas with tight stops in- case the market chooses to re-evaluate the bullish break above $6.45.

Major Support:$7.00- $6.93, $6.45, $5.72, $5.61-$5.44, $4.716, $4.705-$4.68
Minor Support: $5.47
Major Resistance: $7.532, $7.71-7.75, 8.021,

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January Takes Over

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Prices opened weak for the expiring Dec contract and traded down to $6.50 before expiration at $6.712. The January followed the declines in the middle of the night trade falling below $7.00 to $6.968 before finding support as the majority of traders came to their desks. From those early lows of the day, prices found firm footing and traded at a $.45 premium to the weak December contract. The result of the expiration is a premium to Dec expiration but within the recent range from Dec. The market will need to digest the weather forecasts and confirm the recent range or expand it either up or down. Historically, the market shows weakness in the early trade of the Jan prompt.

Major Support:$7.00- $6.93, $6.45, $5.72, $5.61-$5.44, $4.716, $4.705-$4.68
Minor Support: $5.47
Major Resistance: $7.532, $7.71-7.75, 8.021,

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Break Out Through Resistance

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As mentioned in the earlier Daily and Weekly writings, the area around $6.45 was key and the action last week confirmed as a rally broke above and sent the soon to expire over $7.00 quickly. Due to the light holiday related trade and the fact that the virus has returned to my chest — I will keep today’s Weekly Comments short. This last week’s exceptional counter seasonal price strength managed to pull the remainder of the winter strip back to and just above its still rising 40 – week SMA. Mentioned “counter” because there is historical evidence that the period around the Thanksgiving holiday is weaker (usually after trading to a pre-holiday high). Perhaps this year will resemble the historical norms with prices weaker during this week’s trade.

The technical indicators…which is heavily weighted to prompt gas, moderated last week and showed improvement this last week. The volume traded during three- and one-half trading days was nearly as high as five trading days last week…average daily volume increasing an estimated 95,000 contracts as prompt gas rallied to and through moving average, conventional and trend line resistance. Open interest declined modestly, suggesting that short covering played only a minor role in the rally—or that new buying was sufficient to offset what was likely a more significant amount of buying to cover contracts previously sold short.

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Expiration With Limited Comments

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December goes off the board today and The virus has returned to my chest — read the Weekly please. Hope you had a wonderful Thanksgiving.

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As Expected — Retrace to New Support

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Mentioned in the Daily yesterday — I wanted to see a test of the old resistance zone — prices to bounce and rebound. Just about what happened. Want to take this opportunity to wish all of you a Happy Thanksgiving and please enjoy or family and friends. First storage with drawl of the winter season in the storage report so lets rock and roll.

Major Support:$6.45, $5.72, $5.61-$5.44, $4.716, $4.705-$4.68
Minor Support: $5.47
Major Resistance: $6.74,$7.00, $7.18, $7.532, $7.71-7.75, 8.021,

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Key Resistance Falls — Does it Hold as Support

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Saw this movie last month as prices tested $7.00 — closed the day above the key resistance level ($6.40-$6.46) only to give it all up and more on the next day. That was a Monday -Tuesday combo day as well. The question this observer has is the resistance zone coming up (sighted above) hold as support or do prices fall back into the previous range. Today and the rest of the week will give us clues — we may be headed to a new range for traders $6.45-$7,25.

Major Support:$6.45, $5.72, $5.61-$5.44, $4.716, $4.705-$4.68
Minor Support: $5.47
Major Resistance: $6.74,$7.00, $7.18, $7.532, $7.71-7.75, 8.021,

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What Will Break the Range?

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The range that we have discussed for the last two weeks remains and discussions about the options and potential outcomes is discussed in the Weekly. On the Daily, not much has changed since last week as the market seems to be waiting on the next piece of news that will impact price (guess the warming forecasts aren’t enough).

Major Support: $5.61-$5.44, $4.716, $4.705-$4.68
Minor Support: $5.47
Major Resistance: $6.41-$6.456, $6.74,$7.00, $7.18, $7.532, $7.71-7.75, 8.021,

Consolidating For a Run or Break Lower

Weekly Continuation

After a “somewhat” calm wee of trade the question that was mentioned in the Daily –Is gas constructing a base to resume the secular uptrend higher or is it consolidating after a substantial decline during the nine weeks between the August high and the October low, thereby allowing the extremely oversold conditions to moderate, before another “leg” lower. Both directional bias’ seem to have significant contingencies which means that violent whip saw action may occur.

For the market to advance after building this base, a violation of the intermediate downtrend line will suggest that the decline from the August high ($10.028 – $4.750, 52.6%) has likely concluded, but not necessarily that a serious rally will follow. Higher levels of resistance, not limited to the the November reversal high and the still rising 40 – week SMA, are formidable areas. Three of four higher weekly closes suggest that December is gaining the sponsorship for a successful test of the declining resistance. Violation of the trend line and a weekly close above $6.459 will suggest that prompt gas has traded the first higher close of a new intermediate term uptrend (as discussed in the Daily).

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Bias Changing?

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Since Labor Day (just before) price action went from positive to negative and this website has explained the declines and potential outcomes of the technical destruction that had occurred. Now, we are faced with a “tipping point”– the market has used the area around $6.41 as resistance (mentioned here) and there has been only one daily “close” above that area on Monday a couple of weeks ago. That rally turned out false and prices quickly confirmed the silliness. That area is the old gap from the massive sell-off in October and has limited gains since. Yesterday was a great opportunity to settle a day above that area (confirming support) but instead basically closed right on it. For any additional gains in price-the market has to show the sponsorship to close distinctly above that resistance and follow through after the settle. Until that happens– the market remains at the high end of the trading range.

Major Support: $5.61-$5.44, $4.716, $4.705-$4.68
Minor Support: $5.47
Major Resistance: $6.41-$6.456, $6.74,$7.00, $7.18, $7.532, $7.71-7.75, 8.021,

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Rally In the Last 30 Minutes

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Not sure what happened or hit the news wire but prices caught a major bid, rallying $.25 in 30 minutes at the end of the day yesterday. Range trading around $5.80-$5.90 until a whole bunch of folks decided it was wise to be buying. Still trading in the range discussed — I was surprised to see a rally going into a storage report which is likely to show another injection– perhaps the last of the month due on weather this week. Whatever happens — it is again another mystery.

Major Support: $5.61-$5.44, $4.716, $4.705-$4.68
Minor Support: $5.47
Major Resistance: $6.456, $6.74,$7.00, $7.18, $7.532, $7.71-7.75, 8.021,

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