Category: Daily Call

I know the trade yesterday was interesting, bouncing off of the lows from the report only to close higher— but don’t load up on length until a higher high has been established from the recent range $2.20-$2.39 is broken. I do find it interesting that as Nov heads into expiration there has been significant reductions in open interest (likely short covering as mentioned earlier in the week). I doubt today will bring drama but you never know.

Boring, as the trade stays in the same tight range after failing to press through support at $2.21. Continue the range trade but one element is interesting a serious decline in open interest on Tuesday as prices rebounded off of the Monday lows — well before expiration. What is that all about.

The trade continues to confuse this trader— expected additional
declines into the end of the week and they corrected a portion of the
gains. We are still in a range market between $2.18-$2.39 and that range
trade (some slight extensions) is likely to continue until the winter
becomes better defined. Wanted to show you a chart that should be a
cause for concern if you are shorting the market.  It is clear that the
Managed Money short position is expecting price declines as they have
achieved historically large levels.  Not to the level last August, when a
short covering rally ensued carrying prices to $2.70, but this level of
shorts may cause volatility if forced to cover.

Prices continued to press higher yesterday and likely you fundamental folk have reasons for the gains but now prices are starting to test some areas where some short covering can take place. I spoke yesterday that …..It is unlikely there will be any panic from the short seller group until prices eclipse $2.34 on a daily close…. that did not happen but today is a new day. Said yesterday ….Should the shorts be forced to cover in any significant way then $2.49 is “in the cards”… I want to amend that to the market will find some selling at the $2.38-$2.411 provided from the November chart. Until then, look for the range to continue. I doubt any short covering rally will be due to fundamental issues.