Daily Call

Testing Support

Daily Continuous

The declines tried to test support but could only get down to $3.686 and did not quite get to support before finding buyers. Why did that happen with forecasts remaining bearish through the day (fundamental folks told me)? Guess Mother Nature (or the forecasts that claim they can predict) flipped during the late morning? What ever– you fundamental traders can be delusional at time. Think a nice range is developing here between $3.63-$4.085– play it accordingly.

Major Support: $3.734, $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

To read The Daily Call you must be a subscriber (Current members sign in here. ) Start your subscription today.

Rally, Gap Closed, Selling Commences

Daily Continuous

On script, the open was stronger, only to run into the selling on the high side of the gap. The declines were impressive considering that both the Dutch and Britain contracts closed at the highest levels since early October (10% daily gains). Perhaps we can put that garbage, surfacing amongst fundamental traders last fall, to rest. Never understood the relationship, as the US has a finite amount of LNG export capacity and has been running near those limits most of the fall (regardless of the Dutch price). Fundamental folks always need some sort of narrative to explain the rallies or the declines– usually a useless effort. Now we have another narrative, this time about the weather– yup — Chicago beaches will be open for the Holidays. Wonder how fast that will change? As mentioned a couple of weeks ago, the bias in this market is bearish and selling (or shorting) rallies is critical for economic success. Not saying you can’t buy the dips — support areas– but until the market does something to change the bias this should be the strategy.

Major Support: $3.734, $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

To read The Daily Call you must be a subscriber (Current members sign in here. ) Start your subscription today.

Prices Should Continue to Attack Gap

Daily Continuous

Discussed last week’s action in the Weekly area of the web site so will not go over here. Each day last week after the large Monday drop– prices attacked the gap left from the Monday open and would expect the same behavior today. One of my fundamental traders said something to me last week which was basically– forecasts could not get any more bearish so any changes will likely add to demand forecasts. The remainder of December could get very interesting with open interest low (occasionally, an indicator of a bottom forming) and the summer ’22 strip looking stronger than the winter months (having closed to a meager $.13 discount to prompt) suggests the potential for a counter trend run. Did I mention that expiration of the last nine months have had rallies.

Major Support: $3.734, $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

To read The Daily Call you must be a subscriber (Current members sign in here. ) Start your subscription today.

Prices Find Near Term Bottom

Weekly Continuous

Following the previous week’s close of $4.132, when trading resumed on Sunday night the first trade was $3.826, creating a substantial gap in both the weekly and daily charts (discussed in the Daily last week). January recovered about $.06 during the day but found selling at the violated 200 – day SMA…the first violation of the 200 – day since April 6th, and then traded down to $3.630 with the highest volume since the reversal from the October 6th high. The prompt worked higher after Monday’s action with both volume and volatility (and open interest) diminishing. The high traded on Friday afternoon but still left January $.207 lower with a weekly continuation gap between $4.042 – $3.965. This action has left the the short term momentum indicators severely over-sold.

Since the October 6th high prompt gas has fallen $2.836 or 43.9%, while the summer ’22 strip has lost only $.117 from its close on October 6th, equaling 3%. It should be noted that the summer strip posted its its last high on 11/27, $4.334 and has fallen from that high to a low 18.8% from that high. Total open interest continues to fall as traders show little interest in either speculation nor hedging at this point. Will look at total open interest this week and if there is some interesting aspect to the declines — will update during the week.

To read The Daily Call you must be a subscriber (Current members sign in here. ) Start your subscription today.

Another Run at the Gap

Daily Continuous

Prices made another rally at the gap from Monday but to no avail. This week sets up for an interesting open next week as prices could open with a gap up (creating an island reversal) or another hard sell taking prices down and likely putting the Jan contract below the upcoming summer for 2022. The set up will come today as last Friday traded stronger only to give up the gains through the day and telegraphed what the mood was likely to be on Monday. Technical points continue to suggest the mini-range of the week with the high end the gap from Monday. I remain on the sidelines.

Major Support: $3.734, $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

To read The Daily Call you must be a subscriber (Current members sign in here. ) Start your subscription today.

The Gap

Daily Continuous

Prices started to close the gap from the open on Monday, climbing into the low end of the gap at $3.931. This closes the first $.05 of the total gap. Would not recommend buying into or selling into this move– rather take a day and a storage report to confirm the trend, whether that trend is a continuous decline or the start of a rally that may take prices through the gap and higher.

Major Support: $3.734, $3.584-$3.522
Minor Support:
Major Resistance: $3.91,
$4.02, $4.127, $4.25 $4.61, $4.67, $4.735, $4.825, $5.1

To read The Daily Call you must be a subscriber (Current members sign in here. ) Start your subscription today.

After $1.90 Decline in Seven Days – A Rest

Daily Continuous

If you are a bear and thought you were going to get another $.40 decline after the last $1.90+ then grow up or stop trading. Now the market should hit a consolidation trade for a period of time. The fundamental folks all say the declines are because of forecasts. Guess its going to be 70 in Chicago all winter— you know we should address this man made global warming — it having an impact on trading. Whoa, this kinda of sarcasm got me in trouble with a few of you last fall– and that too was about forecasts. So let me digress to what I understand — prices will not go to zero and trees don’t grow to the sky. Time to chill for a while– did I mention that gap??

Major Support: $3.734, $3.584-$3.522
Minor Support:
Major Resistance: $3.91,
$4.02, $4.127, $4.25 $4.61, $4.67, $4.735, $4.825, $5.109-$5.175, $5.339

To read The Daily Call you must be a subscriber (Current members sign in here. ) Start your subscription today.

Gap Open Below Significant Support

Daily Continuous

That is how natural gas likes to eliminate support zones — wait for the weekend and open below the support zone and force a daily and weekly gap in the charts. So it goes when trading gas — we now know the upper boundary for resistance near term and that would be the gap. The support goes back to last summer/spring as prices consolidated for a week around $3.584-$3.522. The market has entered over sold category but we saw that it can stay in the extreme zone last fall as prices were over-bought.

To read The Daily Call you must be a subscriber (Current members sign in here. ) Start your subscription today.

Declines Late Friday Suggest Test April Lows

Daily Continuous

While prices rallied during Friday the selling at the end of the day suggests that prices will open lower which they did in a big way on Sunday night. Opening a gap through the major support zone that prompted the rally last spring. Now we need to see the response to the gap opening and how low prices are tempted to go. Needless to say, the market is becoming over sold and folks seem real comfortable with the “winter is over” concept — seen this before take a look at Dec ’15.

Major Support: $3.944, $3.91, $3.87, $3.734
Minor Support:
Major Resistance:
$4.02, $4.127, $4.25 $4.61, $4.67, $4.735, $4.825, $5.109-$5.175, $5.339-$5.40, $5.64

To read The Daily Call you must be a subscriber (Current members sign in here. ) Start your subscription today.

Collapse Take Prices Down to April Lows

Weekly Continuous

While prices rallied into the December settlement that settlement was below November (the first time a prompt has settled lower than the prior month since April settled discount to March) suggested that the character of the uptrend had changed, Tuesday’s decisive violation of the conventional support surrounding 4.70, the 20 – week SMA for the first time since early Q2 confirmed those assessments. The average of the declines from the fall (winter) over the last 20 years is 37.9% – the declines from the Oct 6th high to the low last week was 37.5%.

While prompt gas lost $1.345 this last week (the largest one – week decline since late February ’14 ($1.526), prompt gas remained above the rising 40 – week SMA (currently 3.905), though looking at the declines in the after market on Friday, expect that level to be tested early this week. The last time that prompt gas approached the continuation 40 – week SMA was over a five-week period during March and April before beginning the rally that resulted in the October high and the summer and fall’s bullish bias. The time before that was just prior to January ’21 expiration when the soon to expire prompt traded to $2.238 and seven weeks later the February high printed at 3.316.

To read The Daily Call you must be a subscriber (Current members sign in here. ) Start your subscription today.