Category: Daily Call

What a day of trade– prices took the cue from the Sunday Silliness and rocketed prices up to the highs of $8.183 only to find significant selling that took prices back below where they started on Sunday. From there– prices rallied back up above the $8.00 level but on lighter volume. Don’t usually show the 5 minute chart that shows price movement in 5 minuted increment but felt it told the story I wanted to provide today–

On the top of chart is the price and on the bottom is the volume associated with the 5 minute price action. Notice the strong volume in the 8-9 am time frame (CDT) only to collapse on good volume for the rest of the morning. Then on lighter volume prices gradually rallied back up to the close just above $7.95. Why is this important– you need to know that this volatility is being caused by light trade not “general consensus”– that is why the divergences were discussed in the Weekly section. Be very careful buying in or selling early directional movements.

Not sure what fundamental news forced price up to $7.872, but that is what happened last night on the open. Refer to it as light trade silliness with trade trying to force some sort of reaction when the trade is light and easily effected. Was provided some interesting analysis from a good friend that was put in the Weekly section– going to give you a choice of what will be occurring in the near future.

For over a year every prompt contract has weakened around mid life as prompt in its tenure– perhaps that’s what we saw this week. May fell 28.5% from the 05/06 high to the 5/10 low. That was the most since the January contract fell 34% just after December expiration. March fell 22% after the spike into February expiration to the earliest pre – expiration low of the last 14 months (02/11). Expect prompt June to continue the trend of supported prices into expiration. There may be some additional losses prior to the historical monthly prompt trend, expect those to be short lived.

Love the occasional text messages from you all– yesterday a comment from an older client struck me with his limited analytic capacity as he wanted to challenge my use of the word “consolidation” describing the trade. Consolidation is a term in reference to the volatility during the day– The last two days of trade have had ranges of $.53+and $.42+ which are well below the ranges since the beginning of the month between $.60-$1.32+. Is this consolidation– yes — is the range greater than when prices were consolidating around $4.00 between $.15-$.30– yes. The key is the level the price is at compared to the recent history of trade. Another interesting comment that I received from a couple of readers and they were mentioning that consolidation would leave to another decline downward. I can not subscribe with that theory– periods of consolidation occurs to set up the next move whether it is up or down. The recent reversals downward may suggest a break down — but I would also submit that the general bias in this market remains bullish having reversed off of highs only to test support at major support ($6.40) only to fail and rebound to where we are.

Major Support:, $7.00-$6.855, $6.411-$6.392, $6.247-$6.278, $5.27-$5.199, $5.001, $4.40-$4.26, $4.187
Minor Support: $6.00, $5.063, $5.04, $4.88, $4.60-$4.557
Major Resistance: $8.47-$9.60

You will notice that the 20 day SMA of the June Contract was broken during trade yesterday only to be tested as support late last night. This area (up to the trend line in the Continuous chart above) will likely hold the trade during the week (without some surprising data on storage). This may provide the long awaited consolidation trade that I have been looking for rather than the $.40 trade ranges of late. We shall see.

Major Support:, $7.00-$6.855, $6.411-$6.392, $6.247-$6.278, $5.27-$5.199, $5.001, $4.40-$4.26, $4.187
Minor Support: $6.00, $5.063, $5.04, $4.88, $4.60-$4.557
Major Resistance: $8.47-$9.60

As suggested yesterday – prices went down to test the major support area but instead of developing a consolidation range, the market decided to run back up to and break the trend line and the 20 day SMA of the prompt June contract as discussed earlier. This volatility is wild when the range is near a $1.00 from low to high. Keep trades active for the day but don’t expect longer term gains from length or shorts in this environment.

Major Support:, $7.00-$6.855, $6.411-$6.392, $6.247-$6.278, $5.27-$5.199, $5.001, $4.40-$4.26, $4.187
Minor Support: $6.00, $5.063, $5.04, $4.88, $4.60-$4.557
Major Resistance: $8.47-$9.60

Prices continued from where they ended on Friday and lost another 12% yesterday taking the prompt below $7.00 (though that level was holding in the late trade). Now prices could settle in and try some consolidation but don’t hold your breath. The trend line on the Daily Chart will likely give us some short term directional bias. This support zone (trend line) may hold down to $6.40 will create the bottom side of the range for the remainder of May.

Major Support:, $7.00-$6.855, $6.411-$6.392, $6.247-$6.278, $5.27-$5.199, $5.001, $4.40-$4.26, $4.187
Minor Support: $6.00, $5.063, $5.04, $4.88, $4.60-$4.557
Major Resistance: $8.47-$9.60

Went into the near term trends associated with last week’s reversal in the Weekly section for your review. Even with the $1.00 decline off of the highs on Friday — the marker remains with a bullish bias (last week closed significantly higher even with the decline). While strength on the open may occur — prices are headed for some consolidation and Friday does not reflect consolidation – rather profit taking. For well more than a year every prompt contract has weakened around mid month in its tenure, the earliest was March that traded its pre – expiration low on 02/11; the latest was May which fell from a 04/18 high at 8.065 to a 04/25 low of 6.345. Expect this June’s role as prompt to remain consistent with that pattern.

Major Support:, $7.00-$6.855, $6.411-$6.392, $6.247-$6.278, $5.27-$5.199, $5.001, $4.40-$4.26, $4.187
Minor Support: $6.00, $5.063, $5.04, $4.88, $4.60-$4.557
Major Resistance: $8.47-$9.60

So prices reverse on Tuesday only to reverse on Wednesday another $.70+ gain from the lows on Wednesday. Anyone else beginning to smell something fishy associated with this run. Though it was still a higher high, regardless of the cod, and there doesn’t seem to be any price that is not worth buying from a risk standpoint. Pardon me, do it with your money as I will continue to intra day position and be out by the end of the day.

Major Support:, $7.00-$6.855, $6.411-$6.392, $6.247-$6.278, $5.27-$5.199, $5.001, $4.40-$4.26, $4.187
Minor Support: $6.00, $5.063, $5.04, $4.88, $4.60-$4.557
Major Resistance: $8.47-$9.60

A reversal yesterday after prices rallied above $8.00 to set a new high in this series of higher highs that the market is performing. Now — what — for the reversal to be more significant, the declines will need to continue and not find as many buyers at support (say $7.00). Wait and watch this week– play the day to day game and would not leave positions out there for several days.

Major Support:, $7.00-$6.855, $6.411-$6.392, $6.247-$6.278, $5.27-$5.199, $5.001, $4.40-$4.26, $4.187
Minor Support: $6.00, $5.063, $5.04, $4.88, $4.60-$4.557
Major Resistance: $7.536, $8.065