Author: Willis Bennett

Testing Initial Support

Daily Continuation

As suspected, after the bogus Sunday night open and rally, prices declined to test the support zone that held declines since Feb 15th, trading down to $4.366. The declines occurred on declining volume, which is likely to continue until serious support zones are broken and the longs are forced to cover. The market is starting to head into a historically positive time of the year (2nd quarter high) which may limit the declines in total but keep the eyes on the summer differed contracts as they may hold the keys to support.

Major Support:$4.38, $4.26, $3.972, $3.734, $3.63, $3.584-$3.522
Minor Support:
Major Resistance:$4.664, $4.735, $4.825 $4.879, $5.088

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Weakness On the Weekly Close

Daily Continuous

After following the expiring March contract up during the normal (trend for the last year) expiration strength, the April contract gave up much of its gains by the end of Friday. I would expect the declines to continue this week but events in Europe may create an external impact.

Major Support:$4.38, $4.26, $3.972, $3.734, $3.63, $3.584-$3.522
Minor Support: $4.48
Major Resistance:$4.664, $4.735, $4.825 $4.879, $5.088

Does April Follow Recent Trends

Weekly Continuation

For the 12th consecutive month prices were well – bid through expiration, the majority of the time, during theses long run of price strength into the monthly expiration, the new prompt has been sold soon off after its predecessor has settled. Recall that March traded its contract high on 02/02 and then fell $1.696. February traded up to $4.077 on 12/28 and then fell to $3.536. January traded to $5.518 coincident with December expiration and then fell to $3.630 in six trading sessions. The last two of those when the calendar January and February traded lows, were higher lows. Granted, there are some international issues that may effect this recent trend but that may not break the trend but rather delay it.

The coming summer strip were largely unaffected by the expiration related volatility. At week’s end the summer was challenging resistance at previous weekly closing highs. It will be informative if the prompt April challenges it support levels in the coming week, providing the opportunity for the summer to weaken.

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Expiration Trend Continues

Daily Continuous

The expiration went as history would expect, as the market rallied to $4.94 to continue the trend of the last year. The big question is where do we go from here– the declines during the day suggests that there may be additional weakness to the trade today– but with the general strength in commodities (likely due to the war issues) it would be hard to predict. Sitting on the sidelines is never a loosing situation.

Major Support:$4.38, $4.26, $3.972, $3.734, $3.63, $3.584-$3.522
Minor Support: $4.48
Major Resistance:$4.664, $4.735, $4.825 $4.879, $5.088

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If You Prefer Holding Gains — Sit on Hands

Daily Continuation

My apologies, but I see no reason to risk any of my gains on this expiration and will prefer to watch the differed summer strip and summer contracts on this expiration day.

Major Support:$4.38, $4.26, $3.972, $3.734, $3.63, $3.584-$3.522
Minor Support: $4.48
Major Resistance:$4.664, $4.735, $4.825 $4.879, $5.088

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What Happens Next

Daily Continuation

Well, off of a rally on the Holiday light trade, prices retreated yesterday to (basically) where it closed last week. Should trend of rallying into expiration been met– not really– but this is an interesting twist that should be respected. I will be stunned to see the short covering rally similar to the Feb expiration in the March rally but some trader’s expectations surprise me (why has a rallied happened in the last 12 expiration’s except for short covering). Today is options expiration — and lets see what it provides for future movements.

Major Support:$4.38, $4.26, $3.972, $3.734, $3.63, $3.584-$3.522
Minor Support: $4.48
Major Resistance:$4.664, $4.735, $4.825 $4.879, $5.088

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Expiration Find Strength

Weekly Continuation

As the last twelve months has proven — expiration’s have proven well bid into the expiration. This month seems to continue that trend if you look at the trade in the light President’s Day trade with prices rallying over $.35. This last week’s strong gains, moved the consensus of technical indicators (which is heavily weighted to the prompt contract) improved but remained neutral. This analysis is primarily because of the failure to close greater than the continuation 20 – week SMA. The last time prompt gas closed higher was week ending November 26th.

Given March’s rally from trend line support ( short – term trend line drawn from its December and January lows), with diminishing volume (the number of contracts traded each day during the past week was less than the corresponding day last week) and failure at the continuation 20 – week SMA suggests that addition long term gains may be limited. Until the market demonstrates that the late tenure sponsorship that has characterized the long string of expiring contract months has dissipated…or disappeared, it should be assumed that it will continue. When something has happened twelve of thirteen times, my bets are going to expect it to continue.

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March Expires — Think Prices Run?

Daily Continuation

Well– in the light trade of Monday and Sunday night prices already rallied so I guess there is little surprise in the headline. Address the upcoming rally in the Weekly section, and you should reflect on the headline accordingly, but recent history suggests that prices will continue on the run. Perhaps not with the bizarre price run of the last day.

Major Support:$4.38, $4.26, $3.972, $3.734, $3.63, $3.584-$3.522
Minor Support: $4.48
Major Resistance:$4.664, $4.735, $4.825 $4.879, $5.088

Price Run Capitulates for Now

Daily Continuous

The four day run in prices reversed yesterday after the storage report was released. Though prices did not really collapse until later the morning when folks realized there weren’t a bevy of buyers out there. Unless the folks are going to use the Europe situation as support for the US market (rather bizarre at this point for reasons already discussed) then prices are likely headed to test support. BTW– the Dutch and UK futures market are showing gains yesterday around 7% last time I checked. This is after declines the previous days. Depending on how any conflict is interpreted by the players — expect a test of support $4.25-$4.15 in the near future.

Major Support:$4.38, $4.26, $3.972, $3.734, $3.63, $3.584-$3.522
Minor Support: $4.48, $4.168
Major Resistance:$4.664, $4.735, $4.825

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Gap Closed, Prices Hold Gains

Daily Continuous

Not surprised that the gap closed yesterday, but was a little stunned that the gains held though-out the trading day. Now being short, will need to establish stop positions which will include the Dec high of $4.664, Sept low $4.735, or the Oct low $4.825, depending on my risk tolerance. This run is not building on volume as the volume this week (daily basis) is the lowest of the month with the exception being last Feb 1st. Open interest has gained slightly this week but not looking like a large break out of new buyers through out the prompt and upcoming summer. Remaining patient.

Major Support:$4.38, $4.26, $3.972, $3.734, $3.63, $3.584-$3.522
Minor Support: $4.48
Major Resistance:$4.664, $4.735, $4.825

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