Category: Daily Call

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.

Early trade shows a stronger opening for price on Monday– we shall see. Technical input continues to have the short term market over sold but the action on Friday severely reduced the extreme levels. Think some of the selling on Friday was bulls being excited about being able to get out of losses at a significantly higher prices than earlier last week.

Major Support: $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

Been warning about the potential of a rally like yesterday for a few days and the storage report provided the fuse for ignition. Look at the CFTC report action of the Managed Money Short position as they gained over the last few weeks.

It is not surprising that while total open interest has been declining, the speculative shorts have now established at over 22% (last report June 28) of the total open interest. Where do prices go from here– unknown– but the rally is unlikely to end immediately and may start to define the high side of an upcoming summer range.

Prices spent another day in a rather quiet day range– almost like the consolidation pattern discussed here several times. May be setting up for a run or developing the potential for additional declines. Likely, the set up is for the upcoming storage report (utilizing that for the volume for the directional push). Runs will find sellers at or around $6.00 while declines will need to break below and close below $5.40-$5.35.

Major Support: $5.623, $5.59-5.572, $5.06
Minor Support: $5.548, $5.40-$5.45
Major Resistance:$6.021, $6.34-$6.43, $6.587, $6.638

Seems the market wants to digest it positioning here as it heads into a light holiday trade weekend. One of the lightest volume days of late. My positioning has not changed will be buying any dips in winter contracts, trying to offset the volatility that may occur in the prompt month. Want to wish you all a great Independence Day celebration as I will not be posting a Daily tomorrow.

Major Support: $6.245, $6.02
Minor Support: $6.19-$6.175
Major Resistance:$6.684, $7.005, $7.66, $7.725, $7.816, $7.955

Not sure how to qualify that expiration– prices declined during the beginning of the process– only to find strength the last two days — was the expiration well bid — I would suggest that 10% gains off of the lows signifies a well bid situation for the 16th consecutive month but the strength only took prices back to where they started– so you can’t call it a rally into expiration. Perhaps I will refer to it as a 15+ month trend. What is left for the August contract to take over as prompt and with the recent rebound, perhaps a slight extension of the recent gains. One element is a given — open interest continues to decline (expiration partially responsible) so the potential for volatility is great.

Major Support: $6.245, $6.02
Minor Support: $6.19-$6.175
Major Resistance:$6.684, $7.005, $7.66, $7.725, $7.816, $7.955

The break down last week had serious technical ramifications (discussed in the Weekly Section) but clearly the close below the major support area bodes for additional declines. The only issue with that is the 15 month trend for expiration being bullish– can prices rally above $6.884 (five day open) to keep that trend securely in track but any serious rally up to the $6.60 will keep the trend open for discussion.

Major Support: $6.245, $6.02
Minor Support: $6.19-$6.175
Major Resistance:$6.684, $7.005, $7.66, $7.725, $7.816, $7.955

Volatility game on big time and prices are selling rallies — does define the end of the bull run since the fall of 2020– no. Does it show the conclusion of the run in 2022 — not sure. Have we finished the expiration process and 15 month trend — not even close– three trading days left and need I remind anyone of the February expiration that sent prices to the first test over $7.00 during the process. Technical damage has occurred this week to the run but prices closed yesterday in that key area between the early April low and early May low (see chart below).

Will get into more assessment of the break down on this chart over the weekend if it occurs.

Startled that the declines never seriously tested the major support from early May and April ($6.50-$6.42) before finding support again and challenging the $7.00 zone. A couple of you have asked what I consider the expiration process — when I was trading cash and futures the 3-day close (setting up the Indices for the month) and what found out was that time period ran into some “issues” by the industry players. Now I look at the last 5 days of trade to watch for trends. Continue to rely on the 15 month trend of the prompt month rallying during the process. It is a trend until it isn’t. Should the trend break — still waiting for serious test of support.

Major Support: $6.426
Minor Support: $$6.60, $6.245,
Major Resistance:$7.66, $7.725, $7.816, $7.955