Category: Daily Call

Was not expecting a break out upward on a Friday– but when prices bounced off the 40 week SMA in the Sept contract the party started. It should be expected that with the reduction of short positions and the hurt feeling associated with the rally event — dips will be bought. Key areas for the dips are $2.28, $2.16 and if it gets back there, $2.055.

Major Support: $2.162, $2.089-$2.055, $2.029-$1.937, $1.86, $1.527,
Minor Support: $2.255, $2.102, $1.975, $1.719
Major Resistance:$2.377-$2.397,$2.43-$2.499
Minor Resistance:

Was expecting more of a test of support with a slightly bearish report. Instead, prices rallied at the end of the day. Perhaps this is the new range $2.08-$2.28 but I believe that there will be another test of support before the expiration, but this expectation is solely based upon the historical trend of prices during this time of year. Am not suggesting that the $2.05 level will break down, rather that the highs for the September contract are likely established and the lows between $2.02-$2.055 will hold going into expiration.

Major Support: $2.055, $2.029-$1.937, $1.86, $1.527, $1.484-$1.44, $1.336
Minor Support: $2.102, $1.975, $1.719
Major Resistance: $2.255-$2.284, $2.377-$2.397,$2.43
Minor Resistance:

Declining below minor support, the declines fell short of first initial major support at $2.055 (50% retracement of last week’ gains) and found buyers at $2.085. That is a good start, not convinced that the declines will stop there forming the lower end of the new range. The only reason for suggesting that potential is the seasonal weakness normally associated with the upcoming Labor Day holiday. This period, historically, is one of the weakest periods of the year for natural gas. This trade year though has not followed historical norms with the q2 high in early May and the Q3 low in late June (not even in the q3) so I may have to discount the impact of the seasons. Storage report today which should give us further indications of bias for the week.

Major Support: $2.055, $2.029-$1.937, $1.86, $1.527, $1.484-$1.44, $1.336
Minor Support: $2.102, $1.975, $1.719
Major Resistance: $2.255-$2.284, $2.377-$2.397,$2.43
Minor Resistance:

It seems that the food feeding this bullish bias may be running low. As discussed in the Weekly- bull runs need to continue to feed the bull with open interest gaining while prices run. Last week, the gains were primarily from shorts covering and nervous hedging by consumers after certain resistance levels fell by the way side. It left prices extended and now the market needs to digest the gains with some consolidation– allowing folks to institute new length. Unlike the collapse after the rally in May– the strength prices maintained through the week should not be discounted. Perhaps we are entering a period of buying dips.

Major Support: $2.055, $2.029-$1.937, $1.86, $1.527, $1.484-$1.44, $1.336
Minor Support: $2.167, $2.102, $1.975, $1.719
Major Resistance: $2.255, $2.377-$2.397,$2.43
Minor Resistance:

Prices backed off the recent run after the open, then rallied just after the storage release, only to retrace into the close. This type of price action was to be expected (suggested) after the short covering was finished. The limits of short covering is explained with the reduction in volume (daily but will be huge for the week) and now the market needs to prove that the rally has “legs”. A retracement of prices back to $2.10-$2.05 and then finding support will be helpful in defining how strong the foundation of this rally will be heading into a historically weak period for prices seasonally.

Major Support: $1.893,-$1.86, $1.527, $1.484-$1.44, $1.336
Minor Support: $2.167, $2.102, $2.055, $1.975, $1.719
Major Resistance: $2.255, $2.43
Minor Resistance:

Prices tried to rally up another $.06 before running into selling at resistance from the Jan ’20 high at $2.255. From there, consolidation started and price broke down to the high teens before the close. Would continue to expect some consolidation of the run this week and we do have a storage report to work with.

Major Support: $1.893,-$1.86, $1.527, $1.484-$1.44, $1.336
Minor Support: $2.167, $2.102, $2.055, $1.975, $1.719
Major Resistance: $2.255, $2.43
Minor Resistance:

Unlike May, when prices rallied on the pipeline break only to retrace the next day, yesterday’s action showed an extension of the gains from Monday. The recent strength in prices may not be going away, but we will see. Momentum indicators, short term, are reaching over-bought levels but longer term are not there yet. Yesterday’s low, early morning low, reached 38% retracement of the Monday gains, but found buyers. That area will now become minor support.

Major Support: $1.893,-$1.86, $1.527, $1.484-$1.44, $1.336
Minor Support: $2.102, $2.055, $1.975, $1.719
Major Resistance: $2.255, $2.43
Minor Resistance:$2.164

As you know, I have been expecting some sort of break out based upon technical conditions — but I did not expect that type of run. Taking price up to the highs from My (after hours) only to find selling once again. Have little knowledge as to what prompted this run, (pipeline explosion happened in May) so the folks trading have heard or seen data that wants them to cover short positions. Yesterday’s gains took prices three standard deviations over the 20 week SMA which is not sustainable over time — so the market should consolidate the gains or the market will just collapse into the range as it did last May. The rest of the week is a key time for the market going into winter. Due to the failure of prices to extend beyond the 200 day SMA in the Sept chart there is a clear area of resistance– now we have to define the support zones that will hold the gains.

Yesterday’s gains went above the 200 day SMA (Sept contract) briefly on to retrace some of those gains and then in the post outcry session took prices back above only to retrace. Is the market taking advantage of the rally to re-establish short (per May rally) or is this a sea change.

As discussed in the Weekly section, September gave up the premium afforded it as prompt quickly last week. The declines continued into the recent range, closing the outright contract below the critical trend line, but when the trade continued prices had rebounded $.02 by the end of the trade day, closing just below this critical trend line. The tendency for the last three weeks, have been Monday’s showing a decline.

We should get a great indication of whether the bias in this market is changing (per the Weekly section) during the coming couple of weeks. Last week occurred on lower volume and a slight gain in open interest, but according to the CFTC report showing positions as of the 28th, Managed Money short positions have been reduced 11,245 contracts while the the Managed Money long positions had increased 7,294 contracts– the speculators seem to be changing there bias.