Category: Daily Call

Very rarely when I take a week off — does the market trade an inside week (within the previous week’s high and low)– usually it blows up or out and I am left to explain what happened. Natural gas trade in a tight range (almost as boring as the fishing) only accomplishing further consolidation for the next move (be it up or down). Go into some of the thoughts of up or down in the Weekly area — for there is ample reasons for both directions. Prices are still in the extreme over bought area on the Weekly RSI but not on the Daily RSI so the consolidation comment is warranted. Price are headed into a seasonal weak period of the year (late July into the Labor Day weekend) so that should put some pressure on the market. The bulls can hang there bias on the market continuing to trade higher and open interest gaining (see Weekly), but volume is starting to weigh on movements. Still consider a brief pullback in order, but natural gas is in a longer term bullish trend (as discussed here since last fall).

Major Support: $3.58, $3.538-$3.511, $3.385, $3.368-$3.316, $3.198, $3.129
Minor Support:$3508-$3.485
Major Resistance: $3.722, $3.769, $3.811-$3.821, $3.87, $4.66

I need to clear up some house keeping issues– I am fishing for Walleyes this week at a lake in Montana. There is no cell service nor internet service at this area so there will be no Daily nor Weekly until my return on July 13th or until further notice.

In the light trade on Sunday night and Monday, prices have rallied back up to the resistance area just short of $3.80. Rock and role kids but this market is over-extended and will be looking for air shortly. Would not be outright shorting (don’t trust the pockets of those I appose) but utilizing some put strategies may be valuable. When the market closes on a weekly basis at nearly 3 standard deviations over the 20 week SMA basis — go for it kids the risk of the rug leaving your foot far outweighs any additional gains, unless you are one of those special folk who has an algorithm that can pick the top– but if your one of those folk why do you subscribe.

For the second day prices to break above $3.80 only to succumb to selling pressure before a pipeline issue took prices back up on an episodic event in the late afternoon in WV. At the time of this writing, prices have retraced much of the episodic event’s effect. Liked the start of a correction that occurred during the trade day and could well be the start of a consolidation process. My only concern was the episodic event causing the brief $.15 run in prices, suggesting that the market will potentially driven by headlines near term.

Major Support: $3.396, $3.368-$3.316, $3.198, $3.129, $3.02
Minor Support:$3.511-$3.538,
Major Resistance: $3.722, $3.81

Can’t even begin explain why, but prices looked to be rocking (similar to July’s expiration) only to run out of enthusiasm and buyers. This dearth of participants forced the market to decline below the close of Mon (August chart) before finding some footing and closing up on the day. As discussed here for eight months, natural gas has a distinctly bullish bias to its trade, but it does need to reform it’s behavior and develop support zones that can be used to propel prices to higher levels in the late summer (more likely fall). Trading well above 2 standard deviations over the 20 week SMA is not supportive behavior. BTW– in the web site a couple of weeks ago, I discussed the “potential” relationship of natural gas to the US$ (discussed by several “pundits”)– kiss that potential link down the road. The dollar has been rising seven of the last ten days and even more odd is the fact crude has been rising also– guess its a new world order.

Major Support: $3.396, $3.368-$3.316, $3.198, $3.129, $3.02
Minor Support:$3.511-$3.538,
Major Resistance: $3.722, $3.81

If you needed additional evidence of the strength in Nat Gas prices look to yesterday’s expiration and following its last three predecessors by rallying into expiration. Not much you an say about a bull run outside of what I highlighted in the Weekly section yesterday. The consolidation should commence but not convinced the rally in mid-term is over.

Major Support: $3.396, $3.368-$3.316, $3.198, $3.129, $3.02
Minor Support:$3.511-$3.538,
Major Resistance: $3.722

Prices broke out to an over two year high (since Dec’ 18) last week and ran through what I would of thought was serious resistance. Poo Poo, that concept while prices close the week on the highs. The only elements missing were the weekly volume flat’ish to the previous week and open interest falling (early estimates). Other than that it is all systems go — right? Be sure to read my Weekly section as there is some color brought by this rally from a long term perspective. I do not subscribe to a continuation of this meteoric rise continuing until it consolidates the gains. Price gains may continue into the first week of July but there will be a reckoning from a technical perspective– just don’t know from where.

Major Support: $3.396, $3.368-$3.316, $3.198, $3.129, $3.02
Minor Support:
Major Resistance: $3.511-$3.538, $3.722

In my world of technical analysis price is always the most important factor in trading and nothing is as bullish as a new high close, in this instance the highest weekly close since the week ending 12/21/18. In addition to that high the bullish implications of the breakout is that the continuous one – year STRIP of prices posted its highest weekly close in more than four years going all the way back to the week ending 05/12/17. Discussed here last fall, when solid indications started, the natural gas market was and continues to change its stripes.

That said, the market is a tad spicy in my view as the rally to higher highs, not scene for over two years, has left prices challenging over bought levels in the Daily and Weekly RSI evaluations. The weekly RSI returned to the edge of its historical extreme zone, ending the week slightly higher than week before last (79.83 v 79.21). The last time the sensitive “leading” indicator was higher was the week of the October – Q4 high and only remained at that elevated level for one week. Another indicator is the Bollinger study below:

I apologize for providing a Daily Chart from Wednesday — I am traveling back to CO and my screen editor does not like the fact I only have one screen. The market broke above the highs from Oct and Nov and I was expecting more of short covering rally– but no such luck. Now the key for the market is to hold the old resistance as support and to build on the break out through the expiration. Some elements would suggest that the real fun will start on options expiration between $3.35-$3.50.

Major Support: $3.396, $3.198, $3.129, $3.00 $2.914-$2.886, $2.78,
Minor Support:
Major Resistance: $3.396, $3.482, $3.526

An interesting trade day as prices started off like the break out above the Oct/Nov highs was a given, then they just traded within a 3penny range until the end when they declined. Thought for sure that the breakout was coming and if it does come with a close above $3.396– kiss that retest I was (still am) expecting good bye. Currently, it is a test of support at $3.129 (didn’t quite get that low – a penny off) and now it is testing resistance and this is a large resistance area. A break above (daily close) and short covering will likely take prices up to $3.48 and develop a new scenario of the rest of 2021.

Major Support: $3.198, $3.129, $3.00 $2.914-$2.886, $2.78, $2.71-$2.70
Minor Support: $2.694
Major Resistance: $3.321-$3.33, $3.369-$3.396, $3.482

Yesterday, I highlighted that prices may build on the declines from Monday to test support levels. The market had other ideas. As I stated yesterday, I do think we will get a test of support levels lower during the expiration process but for now, we look range bound heading into the expiration.

Major Support: $3.198, $3.12, $3.00 $2.914-$2.886, $2.78, $2.71-$2.70
Minor Support: $2.694
Major Resistance: $3.321-$3.33, $3.369-$3.396, $3.482