Author: Willis Bennett

I rarely dive into the “fundamentals” associated with natural gas– but due to the quiet range trade (prices declining back into the range either side of $6.00- discussed here for over a week) wanted to take a shot at the quandary that fundamental traders face. Near term the forecasts are for cold temps and higher demand near term (10 days) but then the models have some warming after that period. So how the folks trade this contradiction – not sure– but the range seems a safer way to trade.

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,

During the trade day the gap from the Sunday opening held well– it wasn’t until the after market (on light trade) that the market corrected but could not close the gap. I know the timing of that decline and the lack of volume during the decline is very important to at least one of you– the attempt was valiant but still unsuccessful. Perhaps the gap closes today but the damage that was done a month ago (when prices declined) was inflicted to the bears yesterday. Would wait to see where the range gets established before entering significant positions. I have fallen to the flu bug over the weekend so not sure that there will be a Daily tomorrow.

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,

The chart above was the standard Daily continuous chart that I download on Sat afternoon. Take a look at the same continuous chart after the open on Sunday night below.

It is that type of opening that I cautioned against selling the gap last week and covering that short if the market closed above that gap– which happened last week. Now what — would not suggest that this is going straight to the moon and would expect more of a gradual two steps forward — one step back type of price action. For now, play the run on just a daily basis (not holding for an extended period).

All this week prices moved either side of $6.00. Monday was a big rally to test resistance and failed — Tuesday a big decline (eliminating the rally) to test mid level support only to fail with the $6.00 number just about in the middle. Guesses are there seems to be some sort of equilibrium, in the traders eyes and positions, to facilitate this behavior. The range has held through weather forecast changes, news about the LNG plant a a bearish storage release. That is a lot of bearish headlines and here we sit in a tightening range. Work the extreme ends.

Major Support: $5.61-$5.44, $4.716, $4.705-$4.68
Minor Support: $5.47
Major Resistance: $6.314, $6.456, $6.74, $7.18, $7.532, $7.71-7.75, 8.021,

Heard from some of the fundamental traders yesterday about the one day up — one day down– one day up phenomenon that has ruled trade this week and my suspicions were confirmed that the movement was due to the changes in the coming two week forecasts. Happens frequently in the shoulder seasons for gas and it makes range trading a cautious strategy. I like sticking to the major range and being patient to see if the support and/or resistance areas hold. The other reason for this approach is the stop losses are usually very close. The market was banging up at the gap again yesterday, failing once again– so do we go back and test support? You can make some money in this $.60 range.

Major Support: $5.61-$5.44, $4.716, $4.705-$4.68
Minor Support: $5.47
Major Resistance: $6.314, $6.456, $6.74, $7.18, $7.532, $7.71-7.75, 8.021,

Mentioned earlier in the week that the gap from a week ago Monday is a low risk sell– little did I know that the trade would profit and cover a portion at near term support in one day. I thought I would need to hold that short until the storage report — but that was not the case. Looking at the total volume from Monday, it was well above the recent total volume for the last week of trade days. It will be interesting to look at the volume from yesterday when it becomes final. The rally may well have been associated with short covering — but then did the shorts come back in yesterday? We shall see.

Major Support: $5.61-$5.44, $4.716, $4.705-$4.68
Minor Support: $5.47
Major Resistance: $6.314, $6.456, $6.74, $7.18, $7.532, $7.71-7.75, 8.021,

What is with this– all you fundamental folks are telling me weather forecasts are bearish for November and Storage will be HUGE at the end of the month– what gives with a $.50 rally. Oh- one reader blamed it on the early and Sunday trade and not the general market– Huh– yo fool — if it was so false and misread bearish bias, why did it not sell back in the full market– seemed like a great place to put shorts on. I digress– no clue why the rally but will mention that the market had declined for the month of October — and prices will not go down for ever in spite of some of your wishes. Would look to sell the gap until it closes above it– then flip and length for the top side of a new range. If it does close above it make sure you have some shorts out there.

Major Support: $4.948, $4.903, $4.716, $4.705-$4.68
Minor Support: $5.47
Major Resistance: $6.314, $6.456, $6.74, $7.18, $7.532, $7.71-7.75, 8.021,

Mentioned last Friday, that with the bearishness associated with the Nov trade — I fully expected the declines to continue and eat the premium associated with the Dec contract. While some of the premium was devoured, the market left a fair amount of meat on the bone (so to speak). Now, much to my surprise with all the bearish bias — prices are up in Sunday night trade? Have little explanation for this behavior, except as mentioned in the Weekly section — sellers may have dried up.

Major Support: $4.948, $4.903, $4.716, $4.705-$4.68
Minor Support: $$5.47
Major Resistance: $6.314, $6.456, $6.74, $7.18, $7.532, $7.71-7.75, 8.021,