Category: Daily Call

For some reason, that I have no clue of, Natural Gas is uncomfortable with gaps which why the gap to the high side is so critical. The gap at the beginning of the week has now been filled (little surprise) what will be more interesting is how the trade responds. I would expect some slight further extension, but there was not the short covering response I would of expected. Have little clue what fundamental reason is for the support this week but I have commented on the gaps on Monday depending on weather. If you are a seller let the folk tell you where they are going to take the trade and have some stops for Monday. If you are a buyer, be careful of the bearish market in general. Did I mention it is Friday the 13th.

Not enough juice to close the Daily— perhaps the storage report will provide. Not a lot of changes from a technical standpoint — just be patient and play the near term range ($2.32-$2.18). Continue to sell rallies (if you want to consider a $.10 run a rally).

Prices rebounded and closed the gap from the Weekly chart at $2.289 but have not closed the gap in the Daily. Judging from the general sentiment (bearish) would be developing a strategy around selling this run in price at some point. The top side of the gap is an area— it did not go unnoticed that after it closed the Weekly gap prices retreated three pennies in 15 minutes— so perhaps a similar result will occur if the Daily gap is filled. Over-all trade the bias and look for rallies to be sold on into Q1 without a major shift in the fundamental forecasts.

Huh— prices gapped lower but just went nowhere during the day. On the opening prices tested $2.158 then rebounded and when folks got to work, prices just traded between $2.20-$2.24— not what I would consider follow through type action. This is not a fundamental website so many of you have tried to explain the weather forecasts creating the action — great — the forecasts must of gone quiet cause prices went nowhere. Good luck on predicting weather, I will stick to technical data points— they include weather. Currently, bearish bias.

Just when I cautioned about the perils associated with shorting the winter contract, prices gapped lower on late Sunday trade. My reasons for warning is to keep you aware of the potential of an issue before it happens. I have little knowledge if a short covering rally is going to happen. Looks to me like the trade wants to test the low teens in the January contract so play along accordingly.

Mentioned earlier about the perilous nature of shorting the winter in December — so I went back and produced the chart above. The Commitment of Traders Report (CFTC) is released each Friday representing position of the Tuesday of the same week and it shows the Managed Money (speculative) short and long positions at that time. Looking at the Speculative Short Position chart above notice the two blue circles at the lows in Dec ‘15 and the lows in Dec ‘17 and what happened to the short position (volume of contracts purple line – right axis)when some event (likely a weather forecast change) forced the shorts to cover. In Dec ‘15 it was an $.80 gain (nearly 50%) and in 2017 it was a $1.00 gain. I bring this to your attention not suggesting it will occur this year but as I mentioned earlier this week you have to be very nimble shorting an early winter market. Each of those years had supportive fundamental data for the declines (just as this year) but when the forecasts changes — everything changes. Have fun be nimble.

Prices fell to test resistance in one day only to turn around two days later and test resistance. Continue to play the range until it breaks out of the range. Wanted to go into the perils of shorting a winter market but couldn’t get the charts to look good— will work on it again tomorrow.

The market showed some serious juice — just when I was not around to comment. Well actually, the juice came on Monday and Friday and the rest was rather un-inspiring. Let me summarize in technical terms — prices choose to blow down through some serious support zones and now look to challenge lows from October and possibly August. To say it had a bearish bias is an understatement, but don’t put this tech guy in the camp of winter rallies are over. The CFTC data was not published but I can assure you some additional speculative shorts entered last week. What does it mean?— look for additional probes lower testing support below.

We loose options today which is unlikely to provide serious volatility, but with the market opening higher last night with a gap in the Jan contract only to retrace that gap leads me to believe that we might have some volatility today. Remember the trend of the last 2+ years is that there is a rally during the expiration process— usually at the end. The speculative short increased their positions significantly before Tuesday of last week which also explains the potential of another short covering rally if the fundamental traders get spooked. While the “island reversal” has held — it is not beyond capitulation, rather just a trading indication. Will be travelling to enjoy the Thanksgiving Holiday at my daughter, house so there will be no Daily until next Monday, unless I get bored and find time. Wishing all of you that read my ramblings, a wonderful break from the routine and spend time with the family.

Not much to say about the price action post release but that prices stayed well above support zones and ended the day just about where they started. Lots of support areas below that have been discussed in the last couple of days— today will be set up by the fundamental traders and the expectations of the upcoming weekend.