Category: Daily Call

When discussing buying positions at support levels, I mentioned keeping stops near as there were some near term stop areas limiting your risk. Yesterday’s action showed why I recommended such. Had no clue that prices were going down $.28 but there was nothing to show why the support zones should hold on this test. In fact, when the breakout occurred in early August, there was not a lot of zones that the breakout retested. Looking at the Spot October contract, you will see the similarities of the break out with yesterday’s breakdown. Going back to that breakout I think that Elvis has left the summer building.

Now what– in the late afternoon trade on Thursday- prices went down and tested the support trend line from the July and August lows before rebounding. We may see some limited knee jerk rally off of the selloff but I am still more interested in the differential to the November contract which expanded back over $.50 yesterday. There are opportunities in the winter contracts as the market defines its winter bias.

As mentioned yesterday, the Sunday gain failed to send prices further up when everyone returned to the office. Prices declined through the trade day on Monday, while yesterday’s action returned prices back where the trade lingered most of Monday. The market seems to be in need of information on the production declines and demand declines (incl. LNG) associated with Sally. My experience has been to keep stops tight during these types of information events.

Major Support: $2.28-$2.26, $2.18, $2.162,$2.089-$2.055
Minor Support: $2.195, $2.102, $1.975
Major Resistance: $ $2.49-$2.51, $2.56
Minor Resistance:$2.37, $2.405, $2.443

Prices started Sunday night up a nickel on some issue. This seems like more than a bounce off of the 50% retracement last week at $2.26, but time will tell. Significant support areas below last week’s Friday close, that the market will have to navigate through. Rallies will just retrace upward through the losses from last week.

Major Support: $2.28-$2.26, $2.18, $2.162,$2.089-$2.055
Minor Support: $2.195, $2.102, $1.975
Major Resistance: $ $2.49-$2.51, $2.56
Minor Resistance:$2.37, $2.405, $2.443

Suggested at the beginning of the week was the potential for the market going to “rhyme” with its history, or continue to run beyond reasonable technical areas. My belief was that the market would succumb to the historical weakness surrounding Labor Day and that is what has occurred. In the last eight years (2020 included) the Labor Day low has occurred sometime by the 10th of September. The seasonal trend continues– the bigger question now is does the market extend lower or start to recover. Needless to mention- the over bought conditions have been mitigated. Still surprised at the expanded spreads in the Oct vs any of winter months– one my highly respected physical traders was as puzzled as I remain. Discussed earlier in the week– one position has to change — either Oct chases Nov, Nov has to decline to Oct, or the market stays keeps the spread extended and the correction will occur after Nov takes over as prompt. Keep those choices in the back of your trading mind.

Major Support: $2.28, $2.186, $2.162, $2.089-$2.055, $2.029-$1.937, $1.86, $1.527,
Minor Support: $2.255, $2.195, $2.102, $1.975
Major Resistance: $2.743-$2.755, $2.809 Minor Resistance: $2.37, $2.49-$2.51, $2.56

Was expecting the declines, as discussed, now the market will need to define the lower boundaries of a new range. This may take a series of gains/declines but will likely be met with a reversal off a new low during the coming week of trade. Not sure what is going on with the differed trade and discussed on the Long term section (it did not trade as expected).

Major Support: $2.38-$2.415, $2.186, $2.162, $2.089-$2.055, $2.029-$1.937, $1.86, $1.527,
Minor Support: 2.377, $2.28, $2.255, $2.195, $2.102, $1.975
Major Resistance: $2.743-$2.755, $2.809 Minor Resistance:$2.49-$2.51, $2.56

As many of you know (who contact me occasionally) I have bee working this run with a series of spreads buying the front and selling the differed months. While it has worked out reasonably well — it has not allowed me the gains to retire. Over the weekend I looked at some of the differentials and will comment on them periodically over the week so stay updated in the Long term section of the web site as I like to keep the Daily — well Daily.

With seasonal history continuing this week expect some additional declines followed by some support buying. As explained over the last few weeks- this is a market that has changed it’s bias and would not expect any major break down in pricing. The outer curve has shown significant support on declines and as long as that sponsorship continues prompt prices are going to have a hard time melting down without the guidance of the differed contracts.

Have tried to explain, the market needs to go through these types of trade days to establish the trend. Going up $.10 on short covering and no new length, is not going to bring additional extensions above resistance. So here we sit in a new range between $2.42 and $2.70– perhaps this holds for the near term (especially through the seasonal weakness around Labor Day) but looking at the differed contracts, the expectation of additional gains looks prominent.

Major Support: $2.51, $2.186, $2.162, $2.089-$2.055, $2.029-$1.937, $1.86, $1.527,
Minor Support: $2.499-$2.468, 2.377, $2.255, $2.102, $1.975
Major Resistance: $2.743-$2.755, $2.809

Prices acted nearly identical to Monday until the end. Unlike Monday, when there was a rebound off of the stale trade around $2.55, yesterday the market behaved more like I thought it was on Monday, by closing just off the lows and the key support at $2.51. This is the consolidation of the runs during August and it may take prices down into the low $2.40’s during the coming seasonal weakness.

Major Support: $2.51, $2.186, $2.162, $2.089-$2.055, $2.029-$1.937, $1.86, $1.527,
Minor Support: $2.499-$2.468, 2.377, $2.255, $2.102, $1.975
Major Resistance: $2.743-$2.755, $2.809