I discuss many of the events that occurred last week in the Weekly section so I will not repeat here. Last week was instrumental in defining an expanding range and a bias change to the near term market. But it also revealed some issues going forward that I urge you to read. For now, on Sunday night, the market seems to be bringing some “reality” back to the trade. Let this correction play out as it may reflect another range change.
Major Support: $4.219-$4.139,$4.083,$4.055, Minor Support : $4.46-$4.42, $3.75,$3.65 Major Resistance: $4.901,$5.01, $5.325, $5.37, $5.49
In the previous Weekly and Daily writings, the handwriting on the wall that prompt gas would trade a higher high, it was suggested that January’s previous highs +/-$4.95 – $5.05 were likely to present formidable resistance. The zone of resistance did limit January’s advance (for a a few days) but did so with increasing volume and open interest. Price, volume and open interest increasing in tandem indicated that the market was getting a running start at higher highs.
Once January broke through the resistance zone, volatility and the range traded expanded. On Friday the low was $5.027 the high $5.496 (creating the range of $.469). You have to go back a way to find the last time a prompt contract traded a wider range. On March 4th prompt April traded $.495 with 1,094,416 contracts changing hands. That March high that established a higher high with less volume. They may still be counting but Friday’s volume looks to be around 1,107,300
It is not often that you see prices decline into a storage release and then when the release announces a more bearish withdrawal than expected, prices rally to set new highs. My guess is that the sellers are on their heals. The weekly charts show a market over-bought (RSI at 86+) and the market is currently well above the 2 standard deviations beyond the 20 week SMA. Bulls should be cautious at these levels of technical extremes. Not saying the run is over- but caution is advised.
Major Support: $4.219-$4.139,$4.083,$4.055, Minor Support : $4.46-$4.42, $3.75,$3.65 Major Resistance: $4.901,$5.01, $5.325, $5.37
Prices decided to close the day on top of the resistance level at $5.01. Now there is a significant area for prices to run into issues between $5.01 and the July ’22 low of $5.325. I am expecting some small retracement back under $5.00 before the next move up should prices want to continue the run
Major Support: $4.219-$4.139,$4.083,$4.055, Minor Support : $4.46-$4.42, $3.75,$3.65 Major Resistance: $4.901,$5.01, $5.325, $5.37
The move yesterday was a slow continuous gain in prices — it is becoming more evident that the mentioned test of $5.00 and prices will likely require additional weather forecasts bring comfort to the bull’s position.
Major Support: $4.219-$4.139,$4.083,$4.055, Minor Support : $4.46-$4.42, $3.75,$3.65 Major Resistance: $4.73-$4.75. $4.901,$5.01
Suggested yesterday that the test and close of last week signaled the potential for prices to test the high from July at $5.01, depending on the response to last week’s close. The trade yesterday, confirmed that the gains will likely test that zone as prices retreated in the early trade only to find the footing and buyers necessary to settle higher than Friday’s close.
Major Support: $4.219-$4.139,$4.083,$4.055, Minor Support : $4.46-$4.42, $3.75,$3.65 Major Resistance: $4.73-$4.75. $4.901,$5.01
New prompt January, the premium for which had diminished to $.061 (versus $.163 a week ago) reversed higher from a December expiration day low of $4.390 to trade the high for calendar November on the last trading day of the month. This was the second straight calendar month to do so. This week’s close was the highest continuation close since the Friday before Christmas in 2022 and the highest close for prompt January since mid – July (07/18, $4.850 v $4.870, the continuation close that day was $3.565, a timely illustration of how deferred month premium dissipates). 2,013,263 contracts traded that week in July, an estimated 2,218,448 during the past holiday shortened week, which suggests that the high traded during week ending 07/18 ($5.018) is likely to severely tested.
The consensus of technical indicators remains neutral but with an improving price positive bias. The improvement in the “bias” was attributable to an increase, in open interest, the first week over week increase since week ending 10/17 . The primary reason that the consensus steadfastly refuses to reach positive agreement is the severely overbought condition. The weekly RSI has remained well into its historical extreme zone for four weeks. That historically dependable mathematical extreme combined with prompt gas ending five straight weeks more than two standard deviations above the 20 – weeks SMA and is now 37% above the 40 – weeks SMA is not, adding significantly to length. Without a substantial retracement of gains from the October low be patient and seek a correction to add to positions.
Discuss the Holiday trade and associated effects on price in the Weekly section. Would expect a retracement in the gains as the market is over-bought on a weekly basis (technically) and the light volume close is suspect.
Major Support: $4.219-$4.139,$4.083,$4.055, Minor Support : $4.46-$4.42, $3.75,$3.65 Major Resistance: $4.73-$4.75. $4.901,$5.01
I refer to the Weekly section for the Daily as I am unable to download my charts while traveling for the holiday. Summarize, expiration will like test the low side to the range developed during Nov. but the decline in open interest may provide some volatility in the near future.
Major Support: $4.219-$4.139,$4.083,$4.055, Minor Support : $4.46-$4.42, $3.75,$3.65 Major Resistance: $4.73-$4.75. $4.901,
I am traveling for the holiday and I can’t get access this afternoon for my charts so please be aware. I will try to update the charts today and publish them on the website. Due to some limitations, I doubt there will be a Daily on Wednesday continuing through the weekend.
Comments on the price movement last week and going forward through the expiration this week;
