Category: Daily Call

Gas Joins the Crude Declines

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The natural gas market fell prey to the economic declines associated with the crude oil declines of late. The declines tested the lows from the middle of February just above the $3.60 level — now lets watch how much the negative momentum will carry prices.

Major Support: $3.60-$3.584, $3.16-$2.97, $2.727, $2.648,
Minor Support : $3.742
Major Resistance: $3.86, $4.168, $4.461, $4.501, $4.551, $4.746-$4.75, $5.031

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Will Energy Weakness Pressure Gas

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Crude has hit the edge and fallen, the dollar continues to decline what is left for natural gas—- no clue but early trade suggests that it too will fall under pressure. It will be interesting to watch how traders interpret the world economic events in the near term. Discuss the future price expectation in the Weekly area.

Major Support: $3.60-$3.584, $3.16-$2.97, $2.727, $2.648,
Minor Support : $3.827-$3.801 $3.742
Major Resistance: $4.168, $4.461, $4.501, $4.551, $4.746-$4.75, $5.031

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Quiet and Developing Range

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No break out or down after the storage release and the price action reflected the non-action by maintaining the recent range — nothing new for tomorrow. Keep the range trading on.

Major Support: $3.60-$3.584, $3.16-$2.97, $2.727, $2.648,
Minor Support : $3.827-$3.801 $3.742
Major Resistance: $4.168, $4.461, $4.501, $4.551, $4.746-$4.75, $5.031

Trying to Define

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Have been discussing the market trying to establish a base for the next bias direction, either up or down, and is the definition of a technical range trade that will likely hold for the near term.

Major Support: $3.60-$3.584, $3.16-$2.97, $2.727, $2.648,
Minor Support : $3.827-$3.801 $3.742
Major Resistance: $4.00, $4.168, $4.461, $4.501, $4.551, $4.746-$4.75, $5.031

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Nothing really new after yesterday’s trade as the market continued into the range after a strong start before slight correction. Still believe this is a market with a long term bullish bias but needs to correct and develop a base to rally from.

Major Support: $3.60-$3.584, $3.16-$2.97, $2.727, $2.648,
Minor Support : $3.827-$3.801 $3.742
Major Resistance: $4.00, $4.168, $4.461, $4.501, $4.551, $4.746-$4.75, $5.031

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The Process Continues

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Usually there are short – term trends between that support and resistance but when volatility is elevated those boundaries are defined by high volume highs and lows. For May gas there was a high volume low on 02/18 at $3.628, another on 03/03 at $3.810. It is pretty rare but in both cases high volume highs were traded on the following day at $4.326 and $4.588, respectively. In both cases the combined volumes of those two days is greater than any other two day period. The zone between the lows is definable support, between the highs is resistance. Volume is the energy that drives price higher…or lower. Volume on the day of the price spike to $4.901 was substantially lower than on the days that defined the zone of resistance (discussed in the Daily). The energy to drive prompt gas higher was simply not present, hence the breakout failed. Also note that volume was lacking on 03/27 when May tested the support and the breakdown failed. While, price and volume are doing the right things for prices to eventually move higher, a correcting substantial increase in volume is going to be required in order for that to occur. I stand that the market will need to consolidate and build for that sponsorship to develop and until, it is going to be range bound.

Major Support: $3.60-$3.584, $3.16-$2.97, $2.727, $2.648,
Minor Support : $3.827-$3.801 $3.742
Major Resistance: $4.00, $4.168, $4.461, $4.501, $4.551, $4.746-$4.75, $5.031

Supported Expiration

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Found it interesting that the May contract went down to the key mid term support at $3.74 before building a rally. Will stay away from this market today and set up some option strategies for the Q2 rally coming in the next few months.

Major Support: $3.60-$3.584, $3.16-$2.97, $2.727, $2.648,
Minor Support : $3.827-$3.801 $3.742
Major Resistance: $4.00, $4.168, $4.461, $4.501, $4.551, $4.746-$4.75, $5.031

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Nothing New as Expiration is Upon Us

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Nothing has occurred that wasn’t discussed in the Weekly and Daily on Monday– so I chose to be quiet. Nothing really happened yesterday that was dramatic or earth shattering to a technical interpretation but I did want to send a quick flag for the expiration– It should hold the March lows of $3.742 and if it breaks that level we may see a brief test of the major support sub $3.60 with the April contract or the May contract as it takes over as prompt.

Major Support: $3.60-$3.584, $3.16-$2.97, $2.727, $2.648,
Minor Support : $3.827-$3.801 $3.742
Major Resistance: $4.00, $4.168, $4.461, $4.501, $4.551, $4.746-$4.75, $5.031

Weak Close Suggests More Down Side

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While the down side movement has now created “mixed” signals to the bias going forward, the move during March still embraces a more bullish environment for gas prices longer term. As far as April goes this week the headline says it all. The way market has finished the last couple of weeks, does not instill supreme confidence of a rally into the expiration — but rather the opposite.

Major Support: $3.60-$3.584, $3.16-$2.97, $2.727, $2.648,
Minor Support : $3.827-$3.801 $3.742
Major Resistance: $4.00, $4.168, $4.461, $4.501, $4.551, $4.746-$4.75, $5.031

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A Break Below $4.00

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Price action broke through the $4.00 level which has been a formidable area of support for nearly a month– now what? I am going to consider this with a “neutral” bias and will wait to see confirmation today. Want to look at the volume and open interest levels from this week and relate them to the price declines. What happened a few days back (higher highs on higher volume and increasing open interest) should not be discounted to the semi-weekly reversal mentioned in my Weekly on Monday. The market (as it does quite often) is sending conflicting technical signals.

Major Support: $3.16-$2.97, $2.727, $2.648,
Minor Support : $3.827-$3.801 $3.742
Major Resistance: $4.00, $4.168, $4.461, $4.501, $4.551, $4.746-$4.75, $5.031

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