Category: Daily Call

The winter contracts are basically over so the focus should be on the weakness continuing into next month but the market is over-sold and will have a rally at some point— just not sure when.

A whole bunch of consolidation trade going on here but no major trade direction changes while the market is at a record level of speculative shorts. Not sure if most of you folks realize that when so many folks get this short there is a group of folks that want to generate income by forcing those shorts to cover. Not sure when it starts but it will. Play the range of the last week but be prepared.

Well in the early morning trade we almost closed the gap from Monday but no luck. Still in the range waiting for the next piece of data to direct. Spending a week in this range has modified an extremely over sold position which should be good for additional declines.

Prices really went nowhere from the open on Sunday night. We are now chasing the lows from 2016 and the issue, from a technical perspective, is the market has extended into over-sold area, but that does not mean additional declines will not happen . The fundamentals (weather) remains bearish but there will be an element to trade that will force profit taking. The question remains does it occur at $1.61, as in 2016, or somewhere earlier.

The close below $2.00 opened up the possibility for prices to capitulate and they have last night dropping to $1.83. Would expect prices to stay above that area during trade today but the key question (with the expansion of the Managed Money short trade) are there enough additional shorts to significantly add to and extreme existing position. You will see on the charts above the Bollinger study has prices beyond 2 standard deviations and the RSI study is in extreme over sold territory. Can’t say prices won’t extend further, but there is likely a brief reckoning coming.

The close below $2.00 opened up the possibility for prices to capitulate and they have last night dropping to $1.83. Would expect prices to stay above that area during trade today but the key question (with the expansion of the Managed Money short trade) are there enough additional shorts to significantly add to and extreme existing position. You will see on the charts above the Bollinger study has prices beyond 2 standard deviations and the RSI study is in extreme over sold territory. Can’t say prices won’t extend further, but there is likely a brief reckoning coming.

Finally, a daily close below the $2.10 zone which should set up a test of the August lows of $2.029. Perhaps the market will get forecasts to propel the market to test those lows. If a change occurs, the market falls back into the range.

Prices tested the support around $2.10 again and found buying— even with the warming changes to the forecasts. The is no technical momentum to the trade currently, support holds – resistance holds. Nothing is oversold, sold additional momentum may occur— but if the fundamental forecast don’t facilitate additional declines — where is going to come from.

Not much has changed as the market softened slightly yesterday but still sits near the high end of the range. I know it is boring but something will break eventually. Until then — play the range.

It seems I am not the only one looking at the trade from a skeptical perspective. We get a bearish storage report and prices rise — oh ok. Then further strength going into the weekend— ok. If markets don’t go down when they get bearish news — then something is amiss. The market has tried several times to get down to the Aug lows a t $2.029 only to find support. Speculative shorts continue to add to positions (according to the CFTC) but are they running out of trade ammo? I am not convinced that this market is going to break below those August lows until the winter is over. Until then — play the range.