Category: Daily Call

Over the years, many of you have heard me discuss short covering rallies, and how they end up. Tuesday is a perfect example, as the rally in gas ran up to key resistance and lost its mojo — all while total open interest declined. That is a pure definition of a short covering rally. Due to lack of buying from longer term interests, when the shorts cleared it opened the potential for profit taking and position re-assessment, which is what we got yesterday. I was startled that the $2.029 area did not find more buyers as that was near term support. The dip buyers didn’t show up until the market chased Monday’s lows. These types of $.10-$.15 daily swings may be on the way as the market redefines its directional bias. Keep you eyes on the Winter Strip and Calendar 2021 as they will hold the key for long term directional bias and not the prompt month whose directional movements are related more to daily fundamental data (pipeline issues and positioning for upcoming storage expectations). While prompt was clocked losing nearly $.20 the winter declined 25% of that. A note for traders, the Dec -20 contract is having a hard time at $3.00, keep an eye on that– trade the range but watch for any break on that contract.

Mentioned over the last couple of weeks that it looked like the potential of a break above the key resistance level was garnering support with higher lows and continual testing of the resistance zone. It happened yesterday with the breakout above that zone ($2.029) and the short covering took prices up to resistance from the 200 day SMA of June contract. Now the market should challenge the support from the break out with tests of those areas over the next few days. Look for buying the dips during these tests of support.

Major Support: $1.82, $1.611, $1.555-$1.519
Minor Support:$2.029, $1.794, $1.78-$1.765
Major Resistance: $2.062,$2.08-$2.102–$2.108,$2.139-$2.16, $2.255
Minor Resistance:

I waited to write the Daily until trade open at 4:00 pm Rocky Mountain time and it soon became obvious that, as mentioned yesterday, it was not a matter of if but when that the break our above was going to occur. Now the key is the short covering that comes with the break out. I suspect that a large amount of covering has occurred and the June contract is going to run into additional resistance from $2.10 onward. Trade with length cautiously and wait for confirmation that dips will be supported.

Major Support: $1.82, $1.611, $1.555-$1.519
Minor Support:$2.029, $1.794, $1.78-$1.765
Major Resistance: $2.062,$2.08-$2.102–$2.108,$2.139-$2.16
Minor Resistance:

Added the spot contract as it also points to some gathering bullishness in the price action. It did not rally to its previous high versus the Continuous pattern, and closed just above its 50 day SMA. Before fading, June traded through the April high for the 15th time in the last 20 years. June ended the week lower ($.005) than last week but was the only contract month of the current 12 month strip to do so. June may continue to fade, as the two daily reversal last week suggest, but significant support will commence at $1.73-$1.75 (three previous weekly closes).

Major Support: $1.733, $1.611, $1.555-$1.519
Minor Support: $1.78-$1.765
Major Resistance: $1.993-$2.025, $2.062,$2.08-$2.102
Minor Resistance: $1.968

After a brief decline, prices rebounded yesterday, well after the storage release data. The market seems to want to test and, possibly, break above the key resistance area at $2.00. I have alluded to the effect of a break above this area, but it is key to near term price action through the summer. There will be some of the potential impacts of a break above (when-ever it happens) in the website next week and the coming weeks. You notice that I said “when” not “if” as I think the market is telling us that if you look to the strips and outer curves. Only a matter of time.

Major Support: $1.611, $1.555-$1.519
Minor Support: $1.78-$1.765
Major Resistance: $1.993-$2.025, $2.062,$2.08-$2.102
Minor Resistance: $1.968