Category: Daily Call

Prices continues lower yesterday testing the near term support at $3.82 which represents the June high at $3.814. This would be a higher low discussed in the Weekly section, but not convinced that the declines are over. The next area for a test lower is the August low at $3.734. A consolidation of the recent $.45+ decline would also be in play for the last day of trade this week.

Prices broke down below the commonly traded Moving Averages and started to test the support from many of the weekly highs from last December (including the lows from the week ending 12/3). A continuation of the break down will likely find little support until $3.81-$3.73 in the coming weeks.

Major Support: $4.02, $3.734, $3.63, $3.584-$3.522 63, $3.584-$3.522
Minor Support: $3.82
Major Resistance:$4.18, $4.32, $4.48, $4.73-$4.775, $4.818-$4.825, $5.045

Not a ton to write about as prices consolidated yesterday and may very well trade in a tight range again today. It seems to waiting for the next piece of news that will drive volatility. Nothing to do trading wise as prices are in the middle of recent range– hello chop trade.

Major Support: $4.02, $3.734, $3.63, $3.584-$3.522
Minor Support: $4.27, $4.19,$3.82
Major Resistance: $4.32, $4.48, $4.73-$4.775, $4.818-$4.825, $5.045

Wrote a Daily yesterday and I doubt anyone read it so I will repeat as prices started strong on Sunday night only to retrace during the quiet trade day. Here is what was written Sunday night….

Discussed in the Weekly section, the tremendous decline in open interest since September had brought with it a potential upside vulnerability. Discussed it last week as more of a fact not a question of if.  This last week, prices all along the maturity curve moved dramatically higher with both volume and open interest increasing substantially (average daily volume by an estimated 200,000 contracts and open interest by the most contracts since the week beginning June 28^th) .  I mentioned in Weekly section that February would remain range bound, while still expecting a range bound trade, clearly the levels of the range has changed to higher levels. Last weeks action also strongly suggests a significant intermediate term low may be in place.  Expect price weakness to attract substantial interest at progressively higher levels.

Natural Gas is such a great commodity trade– goes up $.60+ on one day only to go down $.50+ the next — that is major league chop. Mentioned in the late posted Daily that expect a retracement and consolidation — did not expect the retracement to include nearly all the previous days gains. Volume was huge on Wednesday and just shy of that level yesterday. Open interest is more confusing as it gained nearly 30% on the rally day but only lost under 10% yesterday. I thought a significant amount of the gains on Wednesday was short covering which would show up a a decline in Open interest– not so. Yesterday’s decline can easily be defined as profit taking. Now what– there should be some consolidation in here at some point — may want to tread lightly and short term today. Continue to think that the comments in the Weekly section are spot on about the market in general — but clearly, the range defined in the Weekly, may have to be adjusted due to this volatility.

Major Support: $4.02, $3.734, $3.63, $3.584-$3.522
Minor Support: $4.27, $4.19,$3.82
Major Resistance: $4.32, $4.48, $4.73-$4.775, $4.818-$4.825, $5.045

For most of last month the market traded in a range between $3.60-$4.00 with some very brief breaks out of the range. It seems as though the market is developing a new range with the low of $4.00 currently in place. This week will add some confirmation to the low side , but it is safe to say that with open interest gaining and volume gaining each day, there is technical evidence to support this view. Spoke in the Weekly section regarding this market and its behavior regarding these two market internals (volume and open interest) and the inability of prices to work below the major support around $3.60. Not sure it is time to buy all dips but this behavior is beginning to suggest that trade perspective.

Major Support: $4.02, $3.734, $3.63, $3.584-$3.522
Minor Support: $3.82
Major Resistance: $4.187, $4.22-$4.26, $4.318, $4.423