Daily Call

Prices Remain In Range

Daily Continuation

The price action tested the highs from last month again but could not hold the gains. Early last night, prices tested the highs yet again– not sure what is holding the magical number but the results have been consistent whether crude and or Ukrainian rallies or declines (crude declined yesterday). Until the market breaks out (or down below the $4.36-$4.40 area), the trade continues to work the range (selling rallies).

Major Support:$4.38, $4.26, $3.972, $3.734, $3.63, $3.584-$3.522
Minor Support:
Major Resistance: $4.735, $4.825 $4.879, $5.088

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Market Loves Light Trade Periods

Daily Continuous

Starting to become a trend is prices like moving in either direction after the market closes on or Sunday night into Monday morning. Now yesterday sees the market jumping in the light trade during the early morning and then holding those gains through the general session. Not sure what to make of it all — guess the folks trading in London and Europe are making there expectation known. Yesterday’s gains look like the market is creating a new mini-range between $4.72 and the expansion early yesterday at $4.34. Use those as the guard rails for action today.

Major Support:$4.38, $4.26, $3.972, $3.734, $3.63, $3.584-$3.522
Minor Support:
Major Resistance:$4.664, $4.735, $4.825 $4.879, $5.088

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Testing Initial Support

Daily Continuation

As suspected, after the bogus Sunday night open and rally, prices declined to test the support zone that held declines since Feb 15th, trading down to $4.366. The declines occurred on declining volume, which is likely to continue until serious support zones are broken and the longs are forced to cover. The market is starting to head into a historically positive time of the year (2nd quarter high) which may limit the declines in total but keep the eyes on the summer differed contracts as they may hold the keys to support.

Major Support:$4.38, $4.26, $3.972, $3.734, $3.63, $3.584-$3.522
Minor Support:
Major Resistance:$4.664, $4.735, $4.825 $4.879, $5.088

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Weakness On the Weekly Close

Daily Continuous

After following the expiring March contract up during the normal (trend for the last year) expiration strength, the April contract gave up much of its gains by the end of Friday. I would expect the declines to continue this week but events in Europe may create an external impact.

Major Support:$4.38, $4.26, $3.972, $3.734, $3.63, $3.584-$3.522
Minor Support: $4.48
Major Resistance:$4.664, $4.735, $4.825 $4.879, $5.088

Does April Follow Recent Trends

Weekly Continuation

For the 12th consecutive month prices were well – bid through expiration, the majority of the time, during theses long run of price strength into the monthly expiration, the new prompt has been sold soon off after its predecessor has settled. Recall that March traded its contract high on 02/02 and then fell $1.696. February traded up to $4.077 on 12/28 and then fell to $3.536. January traded to $5.518 coincident with December expiration and then fell to $3.630 in six trading sessions. The last two of those when the calendar January and February traded lows, were higher lows. Granted, there are some international issues that may effect this recent trend but that may not break the trend but rather delay it.

The coming summer strip were largely unaffected by the expiration related volatility. At week’s end the summer was challenging resistance at previous weekly closing highs. It will be informative if the prompt April challenges it support levels in the coming week, providing the opportunity for the summer to weaken.

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Expiration Trend Continues

Daily Continuous

The expiration went as history would expect, as the market rallied to $4.94 to continue the trend of the last year. The big question is where do we go from here– the declines during the day suggests that there may be additional weakness to the trade today– but with the general strength in commodities (likely due to the war issues) it would be hard to predict. Sitting on the sidelines is never a loosing situation.

Major Support:$4.38, $4.26, $3.972, $3.734, $3.63, $3.584-$3.522
Minor Support: $4.48
Major Resistance:$4.664, $4.735, $4.825 $4.879, $5.088

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If You Prefer Holding Gains — Sit on Hands

Daily Continuation

My apologies, but I see no reason to risk any of my gains on this expiration and will prefer to watch the differed summer strip and summer contracts on this expiration day.

Major Support:$4.38, $4.26, $3.972, $3.734, $3.63, $3.584-$3.522
Minor Support: $4.48
Major Resistance:$4.664, $4.735, $4.825 $4.879, $5.088

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What Happens Next

Daily Continuation

Well, off of a rally on the Holiday light trade, prices retreated yesterday to (basically) where it closed last week. Should trend of rallying into expiration been met– not really– but this is an interesting twist that should be respected. I will be stunned to see the short covering rally similar to the Feb expiration in the March rally but some trader’s expectations surprise me (why has a rallied happened in the last 12 expiration’s except for short covering). Today is options expiration — and lets see what it provides for future movements.

Major Support:$4.38, $4.26, $3.972, $3.734, $3.63, $3.584-$3.522
Minor Support: $4.48
Major Resistance:$4.664, $4.735, $4.825 $4.879, $5.088

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Expiration Find Strength

Weekly Continuation

As the last twelve months has proven — expiration’s have proven well bid into the expiration. This month seems to continue that trend if you look at the trade in the light President’s Day trade with prices rallying over $.35. This last week’s strong gains, moved the consensus of technical indicators (which is heavily weighted to the prompt contract) improved but remained neutral. This analysis is primarily because of the failure to close greater than the continuation 20 – week SMA. The last time prompt gas closed higher was week ending November 26th.

Given March’s rally from trend line support ( short – term trend line drawn from its December and January lows), with diminishing volume (the number of contracts traded each day during the past week was less than the corresponding day last week) and failure at the continuation 20 – week SMA suggests that addition long term gains may be limited. Until the market demonstrates that the late tenure sponsorship that has characterized the long string of expiring contract months has dissipated…or disappeared, it should be assumed that it will continue. When something has happened twelve of thirteen times, my bets are going to expect it to continue.

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March Expires — Think Prices Run?

Daily Continuation

Well– in the light trade of Monday and Sunday night prices already rallied so I guess there is little surprise in the headline. Address the upcoming rally in the Weekly section, and you should reflect on the headline accordingly, but recent history suggests that prices will continue on the run. Perhaps not with the bizarre price run of the last day.

Major Support:$4.38, $4.26, $3.972, $3.734, $3.63, $3.584-$3.522
Minor Support: $4.48
Major Resistance:$4.664, $4.735, $4.825 $4.879, $5.088