Daily Call

Storage report came in close to expectations and it wasn’t until large blocks came in that prices started to fall. Have no idea what that means except that some folks may have wanted to cover profits with the failure of breaking through what has become serious resistance between $2.70-$2.72 The recent gains have likely been linked to weather forecasts and I won’t go into to those, except that the probabilities of those to change are extremely likely. Resistance has now been well defined and will need some sort of “issue” to break through that well defined area. A break above $2.72 will force some additional short covering which could take prices significantly higher. Until, the new range is $2.52 and $2.72 so trade accordingly.

Going to be short today . Strong close — once again (nearly three years) folks wait to cover until the end. Guess the initial run was based on weather. Technical indicators are a little overbought on the expiration but that does not mean there can’t be additional buying. Would wait for a small pull back before initiating heavy additional length. Would expect prices to retreat to the expiration of Nov. Having a medical procedure preformed will not publish tomorrow— another storage report that will be a strong injection.

Issues resolved on the chart upload. Big day on options expiration with prices rallying above the resistance area that has held during the month. As is the norm of the last couple of years, prices rallied during the expiration process- so this activity is not new and I am not sure bankable. Not sure if the rally is over but notice that the Dec did not chase the gains to the same degree. Today is expiration so anything is on the table — would hang low on adding significantly to Dec length today. I am more interested in the potential for Dec to trade down to the expiring Nov.

Don’t know why I can’t update the chart but I can tell you that Sunday trade opened with a gap at $2.357 and crawling higher. Still in the big range between $2.20-$2.39 that has held for a long time. Wait for a break above in you are bullish other than that sell the rally. Expiration period is upon us and open interest has slightly declined last week so there may be some folks still short for the monthly rally during the expiration process. .

I know the trade yesterday was interesting, bouncing off of the lows from the report only to close higher— but don’t load up on length until a higher high has been established from the recent range $2.20-$2.39 is broken. I do find it interesting that as Nov heads into expiration there has been significant reductions in open interest (likely short covering as mentioned earlier in the week). I doubt today will bring drama but you never know.

Boring, as the trade stays in the same tight range after failing to press through support at $2.21. Continue the range trade but one element is interesting a serious decline in open interest on Tuesday as prices rebounded off of the Monday lows — well before expiration. What is that all about.

The trade continues to confuse this trader— expected additional
declines into the end of the week and they corrected a portion of the
gains. We are still in a range market between $2.18-$2.39 and that range
trade (some slight extensions) is likely to continue until the winter
becomes better defined. Wanted to show you a chart that should be a
cause for concern if you are shorting the market.  It is clear that the
Managed Money short position is expecting price declines as they have
achieved historically large levels.  Not to the level last August, when a
short covering rally ensued carrying prices to $2.70, but this level of
shorts may cause volatility if forced to cover.

Prices continued to press higher yesterday and likely you fundamental folk have reasons for the gains but now prices are starting to test some areas where some short covering can take place. I spoke yesterday that …..It is unlikely there will be any panic from the short seller group until prices eclipse $2.34 on a daily close…. that did not happen but today is a new day. Said yesterday ….Should the shorts be forced to cover in any significant way then $2.49 is “in the cards”… I want to amend that to the market will find some selling at the $2.38-$2.411 provided from the November chart. Until then, look for the range to continue. I doubt any short covering rally will be due to fundamental issues.