Category: Daily Call

Thought maturity in the market had arrived — little did I know that the teenager was in the wings waiting to stretch its legs taking the trading range over $.50 and blowing through the $6.00 level. Some of you have contacted me about selling some of the hedges we set into position last summer and spring— I can not recommend selling anything into this run until the market sends some signals that the silliness is going to end. Reasons for that center around the potential of Henry Hub running up to $8-$10 before this run is over. There will be corrections taking price down for a day or two, but the over-riding trend is (has been) strength. So unless you want to actively manage (sell and buy back) your hedge positions– stay back and work on other more pressing issues. Did I mention– winter forecasts have not yet been priced into the action.

Major Support:$5.416, $5.341, $5.17, $4.88, $4.61, $4.537,$4.375, $4.211, $4.156, $3.92, $3.821, $3.722,
Minor Support: $4.728-$4.70, $4.66
Major Resistance: $6.24-$6.493

I know this is a reach but the market actually showed some signs of maturity– after ripping upward over $6.00 it, again retraced rather than hold the gains. At $4 and $5 once it ripped up the chase was on. Perhaps my need to see some consolidation is clouding my vision that prices will just continue to jump leaps and bounds– but the trader in me has seen many of these events since 1991 and if they don’t build orderly — then it gets ugly real quick.

Major Support:$5.416, $5.341, $5.17, $4.88, $4.61, $4.537,$4.375, $4.211, $4.156, $3.92, $3.821, $3.722,
Minor Support: $4.728-$4.70, $4.66
Major Resistance: $5.93, $5.88-$6

Prices opened higher Sunday night – so expect the trade to follow four of the last six Monday’s with stronger prices. Explained some of the recent trends in the Weekly section, so I suggest a quick read. Where do prices go— I would guess somewhere between $6.00 and $5.17 in the near term. Many fundamental reasons are spurring this radical trade of the last few weeks — how does that turn out — no clue. Technical data points suggests that consolidation and calming (discussed last week) will need to occur to support further significant gains in the fourth quarter.

Major Support:$5.416, $5.341, $5.17, $4.88, $4.61, $4.537,$4.375, $4.211, $4.156, $3.92, $3.821, $3.722,
Minor Support: $4.728-$4.70, $4.66
Major Resistance: $5.93, $5.88-$6.493, $6.318

The daily ranges for the four trading days this week are $.675, $.653, $.678 and $.534– one flat, one down and two up. This daily range is not sustainable over extended periods of time. It is that reason for my column yesterday that the Nat Gas market needs to chill. It did not happen (as I suggested yesterday) with a storage release — but the release didn’t effect prices at the time of the release but provided a base for prices to run on. Does it chill today — I will not try to guess, not going to short this rally but will be taking some profits if it gets too silly. Prices remain in the extreme over bought zones on almost all momentum charts.

Major Support:$5.65, $5.17, $4.88, $4.61, $4.537,$4.375, $4.211, $4.156, $3.92, $3.821, $3.722,
Minor Support: $4.728-$4.70, $4.66
Major Resistance: $5.93, $5.88-$6.493, $6.318

This market needs to chill and consolidate somewhere along the way. Last weeks declines did not take the Weekly RSI out of the extreme zone and then Monday’s parabolic move moved the indicator to extreme levels not seen in years. All this volatility is great for us who trade it, but it does not invoke confidence for those folks who use it or produce it. As expected, the market declined as Nov took over as prompt. I am not convinced that there will be a decline in volatility today as we get a storage release that usually increases volume and volatility. Speaking of volume, Tuesday’s run and retracement was the second highest volume day of the month. The highest was the day gas ran to $5.65 then retraced– expiration Tuesday was just behind it in volume as prices set a higher high (+$6.30) only to retrace. Odd coincidence I guess. Yes, the market needs to take a breath (possibly retrace more), just not sure today will provide calm or provide more oxygen to the rocket ship.

Major Support: $5.17, $4.88, $4.61, $4.537,$4.375, $4.211, $4.156, $3.92, $3.821, $3.722,
Minor Support: $4.728-$4.70, $4.66
Major Resistance: $5.65, $5.93, $5.88-$6.493

No picture (chart) today as I am having internet problems uploading large documents—let me give you an image of yesterday’s expiration.  Draw a straight line upward to $6.30 and then a retracement down to $5.70, then settling above $5.84.  For all of you who don’t understand technical data interpretations—that is called volatility.  Some of you may want to have technical indications of what will happen—good luck with that as the movements of the last 3 days (trading) have left the market extended into over bought —DUH—status.  Fortunately, most of you knew that yesterday and understand that markets may stay over bought for a period of time- some folks — well what can I say. One thing I can say is in the Weekly I thought prices would trade around $5.17,  don’t think that is gonna happen, but I would expect some sort of decline – remember what was resistance is now support ($5.65).

Major Support: $5.17, $4.88, $4.61, $4.537,$4.375, $4.211, $4.156, $3.92, $3.821, $3.722,
Minor Support: $4.728-$4.70, $4.66
Major Resistance: $5.93, $5.88-$6.493

I had written to expect support for prices during expiration, but in no way did I foresee that parabolic explosion that sent prices back up to the September highs (over $5.65). One would have to believe that any short covering happened yesterday (CME hasn’t updated open interest from yesterday) but there may have been some additional shorts bailing on positions. My thoughts were– strength into expiration– then some retracement as Nov takes over as prompt. Now my thoughts are how far up the pole can prices continue to run before the inevitable correction occurs (aka prices shedding nearly $1 last month after posting $5.65).

Major Support: $4.61, $4.537,$4.375, $4.211, $4.156, $3.92, $3.821, $3.722,
Minor Support: $4.728-$4.70, $4.66
Major Resistance: $5.65, $5.93, $5.88-$6.493

Last week’s strength into the close on Friday suggests that there will be strength in the expiration for the seventh consecutive month. Early trade on Sunday night confirm but the trade is extremely light and should be discounted on impact. The best guess I have is that prompt gas trades both higher and lower than 5.17 (last week’s close) with the likely hood of…higher before October is off the board, then lower during the first few days of November’s tenure. The problem is (looking at the trade on Sunday) how high does Oct trade during expiration.

Major Support: $4.61, $4.537,$4.375, $4.211, $4.156, $3.92, $3.821, $3.722,
Minor Support: $4.728-$4.70, $4.66
Major Resistance: $5.24, $5.486, $5.65, $5.93