Category: Daily Call

No Surprise

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As discussed yesterday, there was no surprise in the storage report yesterday and the reclassification of the gas behind PGE. Market now needs to continue to test support zones and seems to be getting some help from the rising dollar (bizarre as that sounds– discussed that a week ago). I am not taking positions on gas based upon the dollar quite yet — but I am tracking the two. Play the low end of the range from last week for support.

Major Support: $3.198, $3.12, $3.00 $2.914-$2.886, $2.78, $2.71-$2.70
Minor Support: $2.694
Major Resistance: $3.321-$3.33, $3.396, $3.482

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Folks Know About Storage Adjustment

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A lot of you fundamental traders have been alerting me to the big working gas reclassification coming in the report today. Trust me — if I know about some fundamental related issue — the world knows about it. It will be interesting to see how the market trades around it — my inclination is to approach with caution — failed at the highs lets see how the market defines support after digesting the PG&E “adjustment”. Question for you conspiracy folks against gas utilities– do you think there is a possibility that the utility (or its storage management division) bought some PGE basis prior to the announcement — say for the last quarter? Just asking.

Major Support: $3.198, $3.12, $3.00 $2.914-$2.886, $2.78, $2.71-$2.70
Minor Support: $2.694
Major Resistance: $3.321-$3.33, $3.396, $3.482

2nd Run at Nov Highs Fails

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The second attempt to set a new high failed and as a result prices immediately declined. The declines will test areas of support from last week and as discussed yesterday — may well be the most positive event for an extension of the recent rally later this month or into July.

Major Support: $3.198, $3.12, $3.00 $2.914-$2.886, $2.78, $2.71-$2.70
Minor Support: $2.694
Major Resistance: $3.321-$3.33, $3.396, $3.482

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All Systems Go

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It certainly seems like all systems are go for a test and break out above the highs from last fall ($3.396). With that said, I was startled to see the early and preliminary numbers for open interest declining yesterday with volume declining and the RSI still in the extreme zone on the Daily chart. Perhaps some folks are booking profits at the technical highs- will have to wait and see. I still believe that prices have to retest support zones in order to build the base for a rally that can take prices another 10-15% higher (perhaps not during the summer).

Major Support: $3.198, $3.12, $3.00 $2.914-$2.886, $2.78, $2.71-$2.70
Minor Support: $$3.251, $2.694
Major Resistance: $3.321-$3.33, $3.396, $3.482

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Over-Bought But Will It Extend

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That is a breakout as prices ran through resistance with huge volume and gaining open interest. Prices are now a little over-cooked but that may not stop additional gains, however, they will have to consolidate the breakout before moving on. Mentioned significant areas in the Weekly area and some analytics behind last Friday’s explosion. The key for the next couple of days is the late Oct highs at $2.39, mentioning in the Weekly that if prices do not garner the support to break that high — then expect some consolidation.

Major Support: $3.198, $3.12, $3.00 $2.914-$2.886, $2.78, $2.71-$2.70
Minor Support: $$3.251, $2.694
Major Resistance: $3.321-$3.33, $3.396, $3.482

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Slight Extension Higher Followed by Retreat

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Prices were gaining some momentum and then the storage release brought the house down with prices retreating to yesterday’s close. It remains a bullish trend (discussed since last fall) and mentioned yesterday about the nature of the gains in a bull market. This run is not based on sudden short covering, as open interest has gained this week on the higher volume, clearly supporting the market internals. This week’s extension strongly suggest that dips in natural gas should be buying opportunities.

Major Support: $3.00 $2.914-$2.886, $2.78, $2.71-$2.70, $2.658, $2.52, $2.422-$2.414
Minor Support: $2.876, $2.694, $2.483, $2.162
Major Resistance: $3.12-$3.15, $3.198, $3.251, $3.31, $3.396

Consolidation in the Latest Range

Daily Continuation

The market seems to be establishing a new (or latest) range for prices to work with in. What was old resistance at $3.00 now seems to provide support for declines and the highs have now created $3.20 as the new high end of the range. We have witnessed the price to work within the range that has developed in each of the last three months, though each range had different values for support and resistance. This type of stepping upward is a characteristic of longer term runs but we are headed into a notoriously and consistent period of the year (Q3) for lower prices. A struggle may be brewing (not this week but later in the month) for rallies to endure and extend.

Major Support: $3.00 $2.914-$2.886, $2.78, $2.71-$2.70, $2.658, $2.52, $2.422-$2.414
Minor Support: $2.876, $2.694, $2.483, $2.162
Major Resistance: $3.12-$3.15, $3.198, $3.251, $3.31, $3.396

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Old Resistance Continues to Hold Support

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The resistance area around $3.00 which proved so formidable for many months has now held as support for a couple of tests. This has created a narrow range at $3.15 and beyond the $3.15 there is numerous area that will prevent prices from getting to out of control. Would still suggest that prices need to retrace (consolidate) some of the gains.

Major Support: $2.914-$2.886, $2.78, $2.71-$2.70, $2.658, $2.52, $2.422-$2.414
Minor Support: $3.00, $2.876, $2.694, $2.483, $2.162
Major Resistance: $3.12-$3.15, $3.251, $3.31, $3.396

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A Weekly High Close

Daily Continuation

Prices finished the week with a new high weekly close for the July contract and did so with higher open interest and supporting volume supporting the gain in price. This activity is presumed bullish, but July faces an array of formidable and well – defined resistance. The highs of week ending 05/24 (the May high), the high of the past week and the May high of July gas (3.204) are nearly or greater than two standard deviations above the 20 – week SMA. Additionally, prompt gas has historically felt the weight of seasonal pressure during the first couple of weeks of June (historically around the holiday), however, this year the weakness was prior to the holiday. This will need to be defined in the coming week.

Major Support: $2.914-$2.886, $2.78, $2.71-$2.70, $2.658, $2.52, $2.422-$2.414
Minor Support: $3.00, $2.876, $2.694, $2.483, $2.162
Major Resistance: $3.12-$3.15, $3.251, $3.31, $3.396

Consolidation

Daily Continuation

It is beginning to look like prices aren’t going to melt down on the run up to $3.15 as they did in previous runs. The other major difference is the fact that open interest is gaining while prices have traded over $3.00 and the volume this week is greater (on average) than last week. This is starting to look like a consolidation pattern that will keep the floor around $2.90-$3.00.

Major Support: $2.914-$2.886, $2.78, $2.71-$2.70, $2.658, $2.52, $2.422-$2.414
Minor Support: $3.00, $2.876, $2.694, $2.483, $2.162
Major Resistance: $3.12-$3.15, $3.251, $3.31, $3.396

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