Daily Call

Expiration price movements are always a crap shoot and this one is no different, especially after the last two week’s volatility. The Nov contract responded to the gyrations of October but were not as severe. The declines did test the major support zones two weeks ago but failure there allowed for a rally through the remainder of the week. This area (trend line off of the July low and the September low) should be tested in the early phase of Nov taking over as prompt during the upcoming week.

Major Support: $2.752-$2.729, $2.544, $2.518-$2.496
Minor Support: $2.603
Major Resistance: $ 2.905, $2.928

October shows strength during the day and Nov and Dec maintain premiums, for the most part. Today will lead to options expiration, but with all of the volatility and whiplash this week, not sure how many positions still have to be covered. Next week all Support and Resistance will focus on the November contract.

Major Support: $1.864-$1.852, $1.768-$1.70
Minor Support:
Major Resistance: $ 2.162-$2.18, $2.275
Minor Resistance:

Seems like a lot of volatility which was why it was suggested to get out of Oct as some folks are being whipped around and the action is far to risky for this analyst. My suggestion is let the “kids” play but focus on November as the differential will need to addressed to some degree. Not saying the premium has to close (2009 the spread did not close until late winter ’10) but there may be some weakness after the expiration process.

Major Support: $1.864-$1.852, $1.768-$1.70
Minor Support:
Major Resistance: $ 2.162-$2.18, $2.275
Minor Resistance:

Suggested yesterday, that all of the support zones from the several moving averages around $1.97 would likely limit declines. That did not work out well yesterday. The spread to November widened so this expiration is up for grabs and gamblers. Expiration could be a washout like July expiration, or could rally on some late short covering and head back to $2.15– Unfortunately, technical data points don’t limit the potential.

Major Support: $1.864-$1.852, $1.768-$1.70
Minor Support:
Major Resistance: $ 2.162-$2.18, $2.275
Minor Resistance:$1.964-$2.008

The breakdown to the 200 day (several other moving averages- see Weekly section) has created a regression to the mean and now expect another probe down (or two) but there are several support areas provided by the moving averages that should limit further declines. Discussed the expansion of premium afforded the November contract in the Weekly section. Expect the October contract to recover some of the losses from last week during trade this week. After the October contract expires, November may well feel some of the pressure that October endured last week.

Major Support: $1.974, $1.944-$1.924
Minor Support: $1.864
Major Resistance: $ 2.162-$2.18, $2.275
Minor Resistance:$2.37

When discussing buying positions at support levels, I mentioned keeping stops near as there were some near term stop areas limiting your risk. Yesterday’s action showed why I recommended such. Had no clue that prices were going down $.28 but there was nothing to show why the support zones should hold on this test. In fact, when the breakout occurred in early August, there was not a lot of zones that the breakout retested. Looking at the Spot October contract, you will see the similarities of the break out with yesterday’s breakdown. Going back to that breakout I think that Elvis has left the summer building.

Now what– in the late afternoon trade on Thursday- prices went down and tested the support trend line from the July and August lows before rebounding. We may see some limited knee jerk rally off of the selloff but I am still more interested in the differential to the November contract which expanded back over $.50 yesterday. There are opportunities in the winter contracts as the market defines its winter bias.

As mentioned yesterday, the Sunday gain failed to send prices further up when everyone returned to the office. Prices declined through the trade day on Monday, while yesterday’s action returned prices back where the trade lingered most of Monday. The market seems to be in need of information on the production declines and demand declines (incl. LNG) associated with Sally. My experience has been to keep stops tight during these types of information events.

Major Support: $2.28-$2.26, $2.18, $2.162,$2.089-$2.055
Minor Support: $2.195, $2.102, $1.975
Major Resistance: $ $2.49-$2.51, $2.56
Minor Resistance:$2.37, $2.405, $2.443