Category: Daily Call

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

Prices gaped open on Sunday night then retraced during the morning to close both the Daily and Weekly gaps then spent the remainder of the day rebounding off the declines to close the day with a solid gain on strong volume. Now the market will decide to expand on the runs or consolidate the momentum change for a couple of days. Expect a retest of the $4.00 area and perhaps a run at yesterday’s high.

Major Support: $3.734, $3.63, $3.584-$3.522
Minor Support: $3.82
Major Resistance: $4.02, $4.127, $4.20, $4.278

Went into some of the technical / market internals that may be starting to change as prices have remained range bound while open interest has declined in the Weekly section. Needless to say there will be damage to the technical bearish bias if the gap open on Sunday night remains in place. It would be wise to wait for confirmation of the Sunday night run today before establishing substantial positions.

Major Support: $3.734, $3.63, $3.584-$3.522
Minor Support: $3.82
Major Resistance: $4.02, $4.127, $4.20, $4.278

No Daily yesterday as the market had not achieved anything to write about and just stayed with in the recent $.40 range. The storage release came out bearish and prices initially fell only to rebound as the morning went along. The range is what it is and should continue.

Major Support: $3.734, $3.63, $3.584-$3.522
Minor Support:
Major Resistance: $3.827, $4.02, $4.127, $4.20, $4.278

I wish I could make some intriguing technical assessment of the current market — but I can’t. The range is rule so play it. The range does seem to be narrowing as the market sets lower highs and higher lows (daily basis) — so perhaps that will facilitate a break out or break down.

Major Support: $3.734, $3.63, $3.584-$3.522
Minor Support:
Major Resistance: $3.827, $4.02, $4.127, $4.20, $4.278

After discussing all the history around the “gap” events at the first of the year — the market decided to make a fool of me again by having one of the calmest openings to a new year in quite awhile. Now the price action remains in the “old” range trade and is chasing the high end of the range. Continue to work for the $.25 margins provided well within the range.

Major Support: $3.734, $3.63, $3.584-$3.522
Minor Support:
Major Resistance: $3.827, $4.02, $4.127, $4.20, $4.278