Daily Call

Welcome to 2020 and the same range that has held prices for the last month ($2.138-$2.37). The declines held support last week and early trade has them holding currently. Early January trade has occasionally had and impact on trade(highs and lows) during the year and I will aluminate more on that history during the week. Until there is directional bias out of the range — play the range. BTW the CFTC report came out on Monday and showed the speculative short crowd adding to positions through the report date of December 24th.

The weakest expiration level since last July— then prices rebounded and are showing some stability last night on the opening. Still in the recent range — I am startled that the fundamental folks are not pressuring more considering the fundamental data from last week with demand way down and production basically flat (between Canada and US)— then again I am not a fundamental type guy — Continue to play the technical range that continues to exist ($2.15-$2.37). There will still be some potential for volatility, as we are coming up on a historically low volume period.

Here we go — light trade during Holiday periods is subject to above average volatility and we are seeing it last night with the opening well below last Friday’s close. It suggests that the bears who are still extended want to push the market down further but we saw in the CFTC data last week, there was not an extension of short positions, rather the report had the short position flat to the week before, but total open interest declined on Wed through Fri. That smells like short covering as prices were reasonable firm during the period in question. Yes the bears may try to attack the lows of the previous week ($2.158) but they will find buying at those levels in the February contract. Once again— expect volatility especially with the history over the last three years showing strength during the expiration process. The Daily will not be published in the Holiday period (Dec 24-26th) but I will try to have an update before expiration.

The report brought some immediate support but then prices retraced during the day. Still in the range since the gap open last week and last week’s range so continue to play accordingly.

Apologies for no daily yesterday but I had a family medical issue to deal with— the rally was stopped two days ago and continued yesterday with the declines. As mentioned on Tuesday, the fundamental traders were asking me why prices rose on Monday — which left me speechless. Guess we tested support and failed so lets test resistance. This week it seems to be — tested resistance and failed so lets test support— see what happens. Range Trade would look for last weeks low to stay and then another run after a test.

Perhaps there are a few looking to find the shorts but I am confused as to why some strength yesterday when all the fundamental folks tell me that temps are normal to above in the coming weeks. I don’t follow so could care not but there is a strength in the market that could create problems to the short crowd. Monitor this as trade moves this week. High volume reversal off the lows last week suggests the lows for the Jan contract may be in. The strength when not supportive may be indicative of a rotation rather than a commitment to the future.

Prices last Friday could not close above the previous Friday close. That is not a bullish indicator for the start of this week. the speculative short folks increased positions last week (CFTC report dated Dec 10) so they are continuing to expect additional declines. Not sure where the impetus to force the shorts to cover with the forecasts where they are. The market has a bearish bias and would continue to play that until the fundamental trade changes. Declines will take prices back to last week’s lows ($2.158) down to $2.12. Rallies (similar to last week) will find selling into the mid $2.30’s.

For some reason, that I have no clue of, Natural Gas is uncomfortable with gaps which why the gap to the high side is so critical. The gap at the beginning of the week has now been filled (little surprise) what will be more interesting is how the trade responds. I would expect some slight further extension, but there was not the short covering response I would of expected. Have little clue what fundamental reason is for the support this week but I have commented on the gaps on Monday depending on weather. If you are a seller let the folk tell you where they are going to take the trade and have some stops for Monday. If you are a buyer, be careful of the bearish market in general. Did I mention it is Friday the 13th.

Not enough juice to close the Daily— perhaps the storage report will provide. Not a lot of changes from a technical standpoint — just be patient and play the near term range ($2.32-$2.18). Continue to sell rallies (if you want to consider a $.10 run a rally).

Prices rebounded and closed the gap from the Weekly chart at $2.289 but have not closed the gap in the Daily. Judging from the general sentiment (bearish) would be developing a strategy around selling this run in price at some point. The top side of the gap is an area— it did not go unnoticed that after it closed the Weekly gap prices retreated three pennies in 15 minutes— so perhaps a similar result will occur if the Daily gap is filled. Over-all trade the bias and look for rallies to be sold on into Q1 without a major shift in the fundamental forecasts.