Category: Daily Call

Big event yesterday and today will be key. Prices yesterday sent an “island top” for the market to deal with. This is a technical event where all of the supportive issues driving the market were left in the dust as prices gapped lower and never came close to filling. A sign of exhaustion of the buying which was all based on short covering discussed over the last week. If you don’t get gaining open interest on higher volume you don’t have a recipe for higher prices longer term. Perhaps the bulls will try to trade into the island but they will be me will serious selling from a group of bears that just got there claws burned. Discussed yesterday that this is now more of a bearish trade and prices should try to challenge major support.

With the open last night (a gap through minor support) expect low prices for Dec gas coming. Don’t follow the forecasts closely but I am to assume that temperatures are not as cold in the weeks out. Is the run over— the short covering run may be coming to a short term close but that does not mean prices can’t stay firm — the question becomes where do they find support. The price gains have been fueled by short covering, as discussed in the last week , so identifying support is highly risky. Patience early this week may be the optimum call from the long side — if short continue to add until support is defined.

The new mini-range was challenged yesterday on the bullish storage report that turned bearish. Still expect probes lower and perhaps close the gap from Monday at $2.718. Perhaps consolidation is the trade right now.

A new mini-range may be developing, though the storage report today may have an impact, between $2.781 and $2.82 that has held declines so far this week. Buying seemed to be limited as prices could not eclipse the previous day’s highs. Perhaps this is a consolidation of the recent gains, but I would expect a further test of support lower. Have little knowledge a fundamental reason for this but techs would suggest a test of strong support before the next leg higher. With the storage release, all cards are in the air, but the inventories will eclipse 3.7 TCF so we have plenty of gas in the ground unless the rest of winter looks like November. The gap remains from Monday in the Daily and Weekly charts so perhaps some incursion into the gap happens— or not.

Prices gapped above the resistance around $2.72 on the open Sunday night and never even tried to close the gap— guess we have run out of natural gas. What was interesting in the trade yesterday was prices immediately raced to the highs of the general session only to wander about. That is not the price action of additional short covering above resistance at $2.72, I would of expected prices to rally up to the $2.90 zone quickly and perhaps they will. From a tech perspective the market is over bought and should need to digest the gains for a longer term rally into the Q4 (but you never know about a short covering rally). This run is all short covering based upon near term weather forecasts is what I hear. Have no ability to judge the accuracy of statements.

Price rallied at the end of last Friday which leads me to believe something changed in forecasts. All I know is significant resistance areas got pierced in rather easy fashion up to the Sept high of $2.71. Early trade on Sunday has that level taken out but I want to see it on a close. They market is over-bought but in a short covering rally (warned you about that a week ago with a picture) technical levels of resistance are somewhat useless. If you are short — well you were warned- if you are long —remember that rallies based on short covering are not long for life. Continue to monitor open interest and if it starts to increase when prices increase — watch out.

Storage report came in close to expectations and it wasn’t until large blocks came in that prices started to fall. Have no idea what that means except that some folks may have wanted to cover profits with the failure of breaking through what has become serious resistance between $2.70-$2.72 The recent gains have likely been linked to weather forecasts and I won’t go into to those, except that the probabilities of those to change are extremely likely. Resistance has now been well defined and will need some sort of “issue” to break through that well defined area. A break above $2.72 will force some additional short covering which could take prices significantly higher. Until, the new range is $2.52 and $2.72 so trade accordingly.

Going to be short today . Strong close — once again (nearly three years) folks wait to cover until the end. Guess the initial run was based on weather. Technical indicators are a little overbought on the expiration but that does not mean there can’t be additional buying. Would wait for a small pull back before initiating heavy additional length. Would expect prices to retreat to the expiration of Nov. Having a medical procedure preformed will not publish tomorrow— another storage report that will be a strong injection.

Issues resolved on the chart upload. Big day on options expiration with prices rallying above the resistance area that has held during the month. As is the norm of the last couple of years, prices rallied during the expiration process- so this activity is not new and I am not sure bankable. Not sure if the rally is over but notice that the Dec did not chase the gains to the same degree. Today is expiration so anything is on the table — would hang low on adding significantly to Dec length today. I am more interested in the potential for Dec to trade down to the expiring Nov.

Don’t know why I can’t update the chart but I can tell you that Sunday trade opened with a gap at $2.357 and crawling higher. Still in the big range between $2.20-$2.39 that has held for a long time. Wait for a break above in you are bullish other than that sell the rally. Expiration period is upon us and open interest has slightly declined last week so there may be some folks still short for the monthly rally during the expiration process. .