Daily Call

As you can tell from the picture I have changed the format of the charts and hope to hear any comments you have regarding the change. Trying to make them more effective for the reader. I thank all of you who have commented.

As you can tell from the picture I have changed the format of the charts and hope to hear any comments you have regarding the change. Trying to make them more effective for the reader.

As you can tell from the picture I have changed the format of the charts and hope to hear any comments you have regarding the change. Trying to make them more effective for the reader.

The lowest expiration since March ‘16 was immediately met with more selling when March took over as prompt. History tells us that March has tendency of trading a high or a low as prompt during the first week or ten days after February expiration. According to the CFTC data on Friday the Managed Money shorts expanded their short position last week and the market already has an oversold condition. This market is screaming for a short covering rally though it may be brief.

A comment from a subscriber today caught my interest, “will they (the bears) run out of money?” Good question cause I am sure the short positions will increase with the CFTC this week. We have seen this behavior before and it is just a matter of time or maybe this time is different and prices are headed to $1.50. I will not promote that bet just yet as the market is over sold from the momentum indications.

The winter contracts are basically over so the focus should be on the weakness continuing into next month but the market is over-sold and will have a rally at some point— just not sure when.

A whole bunch of consolidation trade going on here but no major trade direction changes while the market is at a record level of speculative shorts. Not sure if most of you folks realize that when so many folks get this short there is a group of folks that want to generate income by forcing those shorts to cover. Not sure when it starts but it will. Play the range of the last week but be prepared.

Well in the early morning trade we almost closed the gap from Monday but no luck. Still in the range waiting for the next piece of data to direct. Spending a week in this range has modified an extremely over sold position which should be good for additional declines.

Prices really went nowhere from the open on Sunday night. We are now chasing the lows from 2016 and the issue, from a technical perspective, is the market has extended into over-sold area, but that does not mean additional declines will not happen . The fundamentals (weather) remains bearish but there will be an element to trade that will force profit taking. The question remains does it occur at $1.61, as in 2016, or somewhere earlier.

The close below $2.00 opened up the possibility for prices to capitulate and they have last night dropping to $1.83. Would expect prices to stay above that area during trade today but the key question (with the expansion of the Managed Money short trade) are there enough additional shorts to significantly add to and extreme existing position. You will see on the charts above the Bollinger study has prices beyond 2 standard deviations and the RSI study is in extreme over sold territory. Can’t say prices won’t extend further, but there is likely a brief reckoning coming.