Category: Daily Call

Not sure what to make of these coming three days of the expiration process. Last month, the sky was fall (as well as prompt) going into the weekend and it looked like the 16 month trend was toast — only to rally 12% in the last two days. This month, prices are coming off of two higher weekly closes and seem to be headed to the moon (discussed in the Weekly section). Does the strength and 16 months trend of prices being well-bid into the expiration– do traders liquidate the moves from last week and take profits– or do prices wallow in a tight zone (the most unlikely considering current volatility). Today is like the key day for August gas– last week folks really like Augy but wanted little to do with the fall or winter prices as August to to a premium to December. That relationship continues to hold on Sunday night as August and Dec are at parity and at a $.13 premium to Sept. August could become an independent beast that no has a clue where it trades — but the market itself may not choose to participate.

Major Support:$8.02, $7.55, $7.14, $6.88, $6.754,$6.38, $6.02, $5.623,
Minor Support: $7.41, $6.42, $5.548, $5.40-$5.45
Major Resistance: $8.417, $8.95, $8.996-$9.057

A crack developed in this recent bull run, as a bullish (so I am told) storage report released and ran prices up only to find sellers during the remainder of the trade day. Have discussed the perils of the light trade and lack of open interest over the last month and yesterday should send a warning flag to the bulls. When prices rally and don’t hold the gains on bullish news — it may be time to re asses.

Major Support:$7.55, $7.14, $6.88, $6.754,$6.38, $6.02, $5.623,
Minor Support: $7.41, $6.42, $5.548, $5.40-$5.45
Major Resistance: $8.02, $8.176

So how does that work– prices are showing slight strength all morning setting up for an additional day of “calm trade” when the market jumps over $.35 in just 5 minutes. Must of been an important news issue but it shows again the inability of this market to “build” upon it’s gains. If it was a weather report — great — wait until the Cdd’s get adjusted down and prices plummet $.35. Not a good environment for a trader to hang out in unless you a long term — say the winter which has Dec trading just a $.04 premium to August. Lack of interest, higher volume yesterday, and high volatility rules nat gas currently.

Prices did not retrace all the gains from Monday but the range trade held and the daily range remained strong. Would continue to expect a summer range to hold prices near term. What will be of interest is the setup for the expiration process — declining only to rally at the end.

Major Support:$7.14, $6.88, $6.754,$6.38, $6.02, $5.623,
Minor Support: $6.42, $5.548, $5.40-$5.45
Major Resistance: $7.41, $7.485, $7.55

As discussed in the Weekly section yesterday, these big rallies and declines are not in the best interest of trying to develop a sustainable trend. They are great for a short term gain (or loss) but does not promote open interest gains seeking longer term gains. Yesterday the gains went up to the 50 day SMA (yipppeeee) only to invoke some selling –OK. Are we up another $.40 today with low volume and no gains in positioning — or perhaps down $.40– reversing yesterdays gains. NO CLUE.

Major Support:$7.14, $6.88, $6.754,$6.38, $6.02, $5.623,
Minor Support: $6.42, $5.548, $5.40-$5.45
Major Resistance: $7.41, $7.485, $7.55

Last week’s close implies a stronger opening today and we are seeing some of that this Sunday night. Don’t hear about a lot of changes over the weekend so that suggests that the current expectations (weather) are already cooked into price. This recent action (four weeks) reminded me of last December which I discuss in the Weekly section and recommend a review. Play the daily directional move for very short term positions– wait for tests of significant support areas for hedging and entering longer term positions.

Major Support:$6.88, $6.754,$6.38, $6.02, $5.623,
Minor Support: $6.42, $5.548, $5.40-$5.45
Major Resistance: $7.144, $7.41, $7.485, $7.55

A very telling day of trade as the report came out and prices immediately declined, followed by additional declines that took prices down to $6.53 only to find some buyers. Those buyers took prices back to where they were when the report was released. From there prices consolidated on a daily basis. What made it interesting was the rapid declines and momentum were abated by the support and buying– is the market defining a different perspective from the recent sell any rally to a more supportive structure–perhaps. Stick with the defined range.

Major Support: $6.02, $5.623, $5.59-5.572, $5.06
Minor Support: $5.548, $5.40-$5.45
Major Resistance: $6.34-$6.43, $6.587, $6.638

Price action continued to strengthen yesterday going into the upcoming storage report. Some of the data behind the release is of interest to this non fundamental trader. While reviewing the last few reports and the data behind the storage injection — I found it odd that the LNG receipts was above last year’s and only 1.5 Bcf/day behind the highs from earlier this year (before the fire). For loosing 2 Bcf/day due to the fire — it seems only a portion is missing from demand picture.— Not sure what that is all about but it may have impact on inventories this October.

Major Support: $6.02, $5.623, $5.59-5.572, $5.06
Minor Support: $5.548, $5.40-$5.45
Major Resistance: $6.34-$6.43, $6.587, $6.638

Discussed in the Daily last week that the speculative short interest (still over 22% of open interest -per the report dated last week) had become problematic and could be the source for some of the buying that occurred last week. With sellers sufficient to drive price lower earlier in the week, then surged higher. It is clear that the lack of total open interest will create volatile movements. While that rally is likely just an oversold reaction, both the daily RSI and the Bollinger study extreme zones, the high volume (on a relative basis) violation of the declining trend line suggests (at the least) a near – term low. More important is that prompt gas undercut the June low and round low on sellers while the 40 – week SMA has now been successfully tested twice.

That said, the gas market traded a rare “outside” month during calendar June (the last one of those was during September ’20) which inflicted a lot of technical issues to the charts. Time will be required to repair the issues and there are a lot of trapped late coming bulls between +/- $5.50 and $9.50. Many of them will be elated to exit those positions anywhere near breakeven. Expect rallies to find some sellers at the beginning of this potential rebound.