Daily Call

This market needs to chill and consolidate somewhere along the way. Last weeks declines did not take the Weekly RSI out of the extreme zone and then Monday’s parabolic move moved the indicator to extreme levels not seen in years. All this volatility is great for us who trade it, but it does not invoke confidence for those folks who use it or produce it. As expected, the market declined as Nov took over as prompt. I am not convinced that there will be a decline in volatility today as we get a storage release that usually increases volume and volatility. Speaking of volume, Tuesday’s run and retracement was the second highest volume day of the month. The highest was the day gas ran to $5.65 then retraced– expiration Tuesday was just behind it in volume as prices set a higher high (+$6.30) only to retrace. Odd coincidence I guess. Yes, the market needs to take a breath (possibly retrace more), just not sure today will provide calm or provide more oxygen to the rocket ship.

Major Support: $5.17, $4.88, $4.61, $4.537,$4.375, $4.211, $4.156, $3.92, $3.821, $3.722,
Minor Support: $4.728-$4.70, $4.66
Major Resistance: $5.65, $5.93, $5.88-$6.493

No picture (chart) today as I am having internet problems uploading large documents—let me give you an image of yesterday’s expiration.  Draw a straight line upward to $6.30 and then a retracement down to $5.70, then settling above $5.84.  For all of you who don’t understand technical data interpretations—that is called volatility.  Some of you may want to have technical indications of what will happen—good luck with that as the movements of the last 3 days (trading) have left the market extended into over bought —DUH—status.  Fortunately, most of you knew that yesterday and understand that markets may stay over bought for a period of time- some folks — well what can I say. One thing I can say is in the Weekly I thought prices would trade around $5.17,  don’t think that is gonna happen, but I would expect some sort of decline – remember what was resistance is now support ($5.65).

Major Support: $5.17, $4.88, $4.61, $4.537,$4.375, $4.211, $4.156, $3.92, $3.821, $3.722,
Minor Support: $4.728-$4.70, $4.66
Major Resistance: $5.93, $5.88-$6.493

I had written to expect support for prices during expiration, but in no way did I foresee that parabolic explosion that sent prices back up to the September highs (over $5.65). One would have to believe that any short covering happened yesterday (CME hasn’t updated open interest from yesterday) but there may have been some additional shorts bailing on positions. My thoughts were– strength into expiration– then some retracement as Nov takes over as prompt. Now my thoughts are how far up the pole can prices continue to run before the inevitable correction occurs (aka prices shedding nearly $1 last month after posting $5.65).

Major Support: $4.61, $4.537,$4.375, $4.211, $4.156, $3.92, $3.821, $3.722,
Minor Support: $4.728-$4.70, $4.66
Major Resistance: $5.65, $5.93, $5.88-$6.493

Last week’s strength into the close on Friday suggests that there will be strength in the expiration for the seventh consecutive month. Early trade on Sunday night confirm but the trade is extremely light and should be discounted on impact. The best guess I have is that prompt gas trades both higher and lower than 5.17 (last week’s close) with the likely hood of…higher before October is off the board, then lower during the first few days of November’s tenure. The problem is (looking at the trade on Sunday) how high does Oct trade during expiration.

Major Support: $4.61, $4.537,$4.375, $4.211, $4.156, $3.92, $3.821, $3.722,
Minor Support: $4.728-$4.70, $4.66
Major Resistance: $5.24, $5.486, $5.65, $5.93

Mentioned in the last couple of Daily’s about the last 6 month expiration behavior being supportive to prices– Yesterday was a re-enforcement of those concerns as prices rallied slightly after the the storage release only to add to the gains into the close with strong support trade on the close. Are we headed back to the September highs?– probably not with the Oct contract but later in the fall, expect a test of those highs at the least. Perhaps the trend of the last six months of expiration strength will be broken but not going to bet against the trend (especially in a long term bull market trend).

Major Support: $4.61, $4.537,$4.375, $4.211, $4.156, $3.92, $3.821, $3.722,
Minor Support: $4.728-$4.70, $4.66
Major Resistance: $5.24, $5.486, $5.65, $5.93

Was curious if the declines would extend below the $4.72 area and was not surprised the the selling ran out of momentum. Just a solid day of price consolidation after loosing nearly a dollar (16.5 %) decline. Still expecting declines but have to respect the last 6 month trend of expiration rallies. Strategic times in this area for setting up final winter positions.

Major Support: $4.61, $4.537,$4.375, $4.211, $4.156, $3.92, $3.821, $3.722,
Minor Support: $4.728-$4.70, $4.66
Major Resistance: $5.24, $5.486, $5.65, $5.93

The discussion yesterday was having a test of $4.75 and that challenge is now completed — the next challenge will be testing the $4.66 area and my thoughts on that are muddled with the history of the last six expiration’s ending with rallies. Not convinced that the area from the Dec ’18 highs will be tested with the Oct contract. Prices have declined for four consecutive days — it is likely we will see a bounce.

Major Support: $4.61, $4.537,$4.375, $4.211, $4.156, $3.92, $3.821, $3.722,
Minor Support: $4.728-$4.70, $4.66
Major Resistance: $5.24, $5.486, $5.65, $5.93

Prices started lower on Sunday night (similar to recent weekend prices) only to find support on the open of the outcry which took prices up to $5.17 before the selling resumed. Unlike the previous Monday’s, prices retraced and settle the day down. As discussed yesterday, the market should build a consolidation period to launch into the Q4 run that will be coming later this fall. Would expect a test of support somewhere between today’s low and $4.75 during the near term. The only caveat to that expectation is the history of expiration rallies for the last few months.

Major Support: $4.879, $4.61, $4.537,$4.375, $4.211, $4.156, $3.92, $3.821, $3.722,
Minor Support: $4.90, $4.728-$4.70, $4.65
Major Resistance: $5.24, $5.486, $5.65, $5.93