Category: Daily Call

Prices opened down $.20 in the Sunday night trade, creating a gap in the Daily and Weekly charts between $4.487- $4.384. My assumption is the forecasts changed (warmer) and Sunday night’s action is more about liquidation (volume high in initial 5 minutes) than an alteration in the bias. Go into expectations for the March contract in the Weekly section – but let me summarize that the declines (now and may be coming) do not alter the general bias that remains in the market. I mentioned last week about the expected trade in early March (as prompt) contract and those expectations have come true — now it is time to trade with a range trade bias.

Major Support: $4.20-$4.186, $4.057-$3.972, $3.734, $3.63, $3.584-$3.522
Minor Support: $4.52, $4.38
Major Resistance: $4.82, $5.572, $5.81-$6.13

Not sure how many of you were traders in 2014 but the similarities to the trade in Jan/Feb of 2014 and this year are beginning to show a striking similarity. Fundamental in late Dec ’13 and Jan ’14 were weak and then the market got on the coattails of late winter showing up in Feb ’14. Shorts (I was one early in the process) got pummeled, fortunately I flipped the bias for the last week and made up some of my losses. Then the market got stupid (nat gas has a history) and started to correct which worked out just dandy. In late Jan ’14 – early Feb ’14 prices went from $4.20 – $5.72 at the end of the month. Then proceeded to rocket to the highs of $6.493 in the middle of Feb. Oops — then corrected back to $4.44 as the March contract expired. Have no idea how high this silliness will go — perhaps to the highs of last week– but it will correct and will is a very short period of time. Be careful if your buying into the weather hype– remember last October when Europe was going to run out of gas and prices fell over $1.00 in a day off the highs, then proceed to loose another dollar over the next 8 trade days.

Major Support: $4.19-$4.186, $3.734, $3.63, $3.584-$3.522
Minor Support: $4.73, $4.52, $4.38
Major Resistance: $5.81-$6.13, $6.181

Prices expanded the range a little lower before recovering and rallying as the day went along. This is still a developing range trade and patience during the week would be the best suggestion after last weeks small explosion on expiration.

Major Support: $4.19-$4.186, $3.734, $3.63, $3.584-$3.522
Minor Support: $4.73, $4.52, $4.38
Major Resistance: $4.876, $5.088, $5.81

Early Sunday night strength melted during the early day trade only to be revisited during the remainder of the day trade. Market seems to be testing resistance at the new range that was developed during the trade last week. Would not consider the highs from the short covering expiration as the high end of the range but where prices trade to this week as a better indication.

Major Support: $4.19-$4.186, $3.734, $3.63, $3.584-$3.522
Minor Support: $4.73, $4.52, $4.38
Major Resistance: $4.876, $5.088, $5.81

Explained in the Weekly section about an issue with my charting software and not being able to chart the run on the expiration day of Feb gas. Will look to correct this week. Regardless of charting software– the market did not give up the gains in Mar gas and the open on Sunday night confirmed the strength on Friday. The Weekly section discusses the history of Mar gas after Feb expiration and trading in early February and recommend reading as it highlights what to expect this week. Due to the volatility around the expiration and Sunday night– I will be sidelined until the market has a chance to define its new ranges — that said it seems that the bullish bias to trade is back and that dips will likely be bought.

Major Support: $4.19-$4.186, $3.734, $3.63, $3.584-$3.522
Minor Support: $4.52, $4.38
Major Resistance: $4.73, $4.876, $5.088, $5.81

Now that is a “wood shed” moment- The chart above clearly shows what happens when volume is light at expiration and some folks have to cover. The High of $7.346 is unbelievable and well above my closing range high for Feb gas in the Weekly section — That said, prices did return for a few trades with in the range. What is more important is the Daily chart below for March gas that takes over as prompt tomorrow. In the Daily chart below, notice it did not enjoy the same short cover squeeze that prompt Feb endured, rather staying well within the defined range.

Take a day or two to let the “froth” in the market to clear define it’s intention by consolidating in a new or similar range. Guess it is cold back East, buy gas now. Let this digest.

Mentioned in the Weekly Section that a rally might take prices to last week’s high (false holiday rally) and that is exactly where the expiring Feb contract went yesterday. As expected, the summer nor the March followed with such gusto. If you are still in the Feb good luck– for the March and summer months I think this is a good place to sit back and take a few breaths.

Major Support: $3.734, $3.63, $3.584-$3.522 63, $3.584-$3.522
Minor Support: $3.82
Major Resistance: $4.18, $4.32 , $4.39, $4.48, $4.73