Daily Call

New Year’s History and Weekly Review

For whatever reason prompt gas has a habit of beginning (or in close proximity to the beginning) each new year with a significant event and more often than not, that event takes the form of a gap. Not sure if history will rhyme this year, but you may want to consider just a couple of factors:  1) In six of the last seven years began with a gap one way or the other, and far more important, 2) that the January high and low historically carry disproportionate importance.  For example, in 2019 the new prompt February gaped lower on the last trading day of the year.  That gap was filled and the January high traded on 01/15. That high held the market throughout the year.  The January ’19 low was not traded until the 29th…and was promptly violated on the first trading day of February.  In 2020, there was no gap but the rally in early Jan ’20 set the high for the year. Last year, the market had a gap at the end of December only to rally, rally with a gap at the new year, but prices never challenged the low from the late Dec gap. 

Again, based on all the history we have, whatever the January extremes turn out to be are going to be important to your planning for the year.  It is easy to lose sight of the importance of price levels traded early on.  Just about everyone in the market seems to have interest and more attention to short – term fluctuations but I encourage you to at least give price change during January your attention.  

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2021 Comes to An End

Daily Continuous

This will be the final Daily for 2021 — I hope you enjoyed as strong a year this last year and hope to repeat it in 2022. Not much to say about prices except that it looks like the tenth consecutive month that has been well-bid into expiration. Am thinking about writing an article about an odd historical activity that occurs around the fist of the New Year — so check the web and your email on Thursday or Friday. Good Luck in 2022.

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Expect Additional Strength

Daily Continuous

Heading into the expiration and some changes in the forecasts leads to some early strength on Sunday night. The last week of the year is historically light in trade volume and subject to volatility. The technical indicators are starting to show some over sold momentum and at the low end of the December range. This week should provide some indications of the upcoming range in January.

Major Support: $3.734, $3.63, $3.584-$3.522
Minor Support:
Major Resistance: $3.91-$3.93, $4.02, $4.127, $4.20

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Expiration Strength Likely to Limit Declines

Weekly Continuation

Nine consecutive contract months have been bid into expiration, with the last six have traded a low between the 15th and 21st. This week’s low traded on Friday the 23rd represents the latest for an expiring month since June traded a low on 05/24 only to rally during its last three trading days. Failure of expiring January to rally before it goes off the board will likely suggest another character change for the market and weakness into at least early ’22.

Multiple technical violations have been discussed as they occurred over the past couple of months. Together these have spelled the end of the year and a half uptrend. That said, also note that on a monthly basis the long – term uptrend remains in effect and the coming summer strip remains above its 40 – week SMA The decline from the Q4 high was exacerbated by the liquidation of open interest and looks to be overdone just as the rally that extended more than 50% above the 40 – week SMA, last fall was.

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Concerns From Europe

Daily Continuous

While the NYMEX continues to range trade the European and Britain gas contracts have been screaming, eclipsing the highs from early October (same period that the prompt Nov set the high for NYMEX). My concern is that the run over the pond finds its way to the US as it did last fall. So far, the mild forecasts have provided the hedge folks with a good short if long the Dutch contract. That is what bothers me if those shorts are forced to cover due to forecasts changes. Will look at the data from the CFTC over the weekend to find any clues. Until then, will continue to work the range.

Major Support: $3.734, $3.63, $3.584-$3.522
Minor Support:
Major Resistance: $3.91-$3.93, $4.02, $4.127, $4.20

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Prices Continue Calm Behavior

Daily Continuous

The action was quiet and likely to be lighter as the week moves on. Several folks have mentioned that the way the Holiday sets up — folks will be taking time before as well as after the Holiday. In spite of the folks traveling volume was stronger as it has been on the last three Mondays. Expect this type of behavior to continue with this caveat– the amount of open interest (bulls loosing faith) that has left the market during the month, leaves the potential for upside bias and the last nine months being well did into expiration, may eventually run prices.

Major Support: $3.734, $3.63, $3.584-$3.522
Minor Support:
Major Resistance: $3.91-$3.93, $4.02, $4.127, $4.20

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Gap Closes — Price Reversal

Weekly Continuation

Discussed it in the Daily last week, but prices preformed a reversal after the early week closure of the Daily and Weekly Gap. Following Monday’s reversal day prompt gas traded quietly (as compared to the to recent volatility), with substantially less volume than the prior week, but on Friday the declines declined below last week’s low by $.013 to leave a technically bearish “outside” week reversal. This creates a price negative technical presumption and January ended the week in the lower quarter of the recent range traded and on a continuation basis the lowest close since July 16th.

Price action seems to develop the construction of a trading range as prompt gas attempts to define some kind an equilibrium. A year and a half ago prompt gas rallied from its July expiration multi – year low but it wasn’t until August that trade through the May high resolved an extended trading range to the upside and a confirming higher low in September provided some definition to the uptrend.

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Range, Range, Range

Daily Continuation

As explained last week, the market seems to be testing a narrowing range between support and resistance. Last week provided some indication of bias as discussed in the Weekly area. Here we sit at the low (support) side of the range and prices seem to be gaining on Sunday night. Read the Weekly for expectations for the week.

Major Support: $3.734, $3.63, $3.584-$3.522
Minor Support:
Major Resistance: $3.91-$3.93, $4.02, $4.127, $4.20

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Same Tune

Daily Continuous

Not much to say post storage release– prices continue to consolidate and some patterns have started to develop during the trade day which I will go into over the weekend. Unfortunately, the prices remain in the middle of the recent range developed. Continue to play the range. Heads up — the Daily will be available on Dec 20, 21 and 22 there will not be a Daily on the 23rd through the Holiday weekend. Will update on the Daily and Weekly report out on the 27th.

Major Support: $3.734, $3.63, $3.584-$3.522
Minor Support:
Major Resistance: $3.91-$3.93, $4.02, $4.127, $4.25 $4.61, $4.67, $4.735, $4.825, $5.10

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Neither Support Nor Resistance Tested

Daily Continuous

Prices extended to the high side of the range but did not get near the true resistance area. Volume continues to decline during this consolidation phase. It should be considered as a consolidation process after the tremendous declines and need to be digested. The results from this phase will likely define the bias for the near future. Will be discussing the trends of expiration for the last 9 months in the coming week, as we are headed to lighter trade, due to the Holidays, and the market could become subject to volatility.

Major Support: $3.734, $3.63, $3.584-$3.522
Minor Support:
Major Resistance: $3.91-$3.931, $4.02, $4.127, $4.25 $4.61, $4.67, $4.735, $4.825, $5.10

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