Finally got a little move up to initial resistance — it will be interesting to watch. Still bearish technical input and now all this should be characterized as a counter trend rally to test resistance.
Major Support:, $1.848, $1.52-$1.511, $1.481, $1.312 Minor Support : $2.00, $1.967- $1.94 Major Resistance:$2.18, $2.39, $2.44-$$2.502, $2.618, $3.00, $3.16
August gas fell into expiration as was expected. This makes it the seventh straight month (all of the expiration’s in calendar ’24) the prompt was amply offered into expiration and the fourth of those seven to trade the low of its tenure as prompt coincident with expiration.
New prompt September closed higher for two days after August was off the board, managing to close above some declining trend line resistance, but without volume confirming the recovery with a reversal following with increased volume (and a significant increase in open interest strongly suggesting heightened interest in shorting the new prompt). September traded new contract lows on Thursday and Friday, trading as low as low as $1.920 before ending the week $.084 lower (on a continuation basis prompt gas was .0$39 lower). August’s closing range before recovering raises the technical odds that September will get a shot to finish closing the gap. If September closes below $1.848 then the daily gap comes into focus ($1.628 – $1.85).
On May 1st total open interest was 1,587,270. By June 12th the total had fallen to 1,443,769 allowing for that nearly 150,000 contracts of short covering had been a significant contributor to the June 100%+ rally. Since 06/12 open interest has returned to and this week surpassed the early May high (currently 1,592,601). That total is less than 25,000 contracts below the twin peaks that preceded the February and March lows.
Give the downside momentum created by the multiple weeks decline from the June high, the expected weak expiration of August gas and September trading a new contract low, expect the prompt to be offered lower to close the late April gap. On a weekly continuation basis, the fraction of that gap remaining is between $1.848 and $1.856.
Longer term, these declines and the constant attack at rallies by the bears will lead to a short covering rally similar to what was experienced in early June. Perhaps, that will be the driver for the annual upcoming Q4 run.
Major Support:, $1.848, $1.52-$1.511, $1.481, $1.312 Minor Support : $2.00, $1.967- $1.94 Major Resistance: $2.39, $2.44-$$2.502, $2.618, $3.00, $3.16
The market is poised to test the lows from earlier in the spring (discussed in the Weekly) and is starting to add to the declines in the Sunday night trade. Not sure if the storm will impact prices as the potential for demand destruction was well known on Friday afternoon. Continue to expect the Q3 low to be established between now and Labor Day weekend.
Major Support:, $1.848, $1.52-$1.511, $1.481, $1.312 Minor Support : $2.00, $1.967- $1.94 Major Resistance: $2.39, $2.44-$$2.502, $2.618, $3.00, $3.16
The first day of the September contract as prompt showed some slight strength but time will tell for the contract. Still expecting the lows later in the month so perhaps this is just some consolidation until the next decline occurs.
Major Support:, $1.848, $1.52-$1.511, $1.481, $1.312 Minor Support : $2.00, $1.967- $1.94 Major Resistance: $2.39, $2.44-$$2.502, $2.618, $3.00, $3.16
The trend of expiration’s continue as the August contract was well offered just as it’s predecessors. With the light volume associated for the last week would not expect any great volatility in the next week. Perhaps the demand will bring some support – but it should be short lived.
Major Support:, $1.848, $1.52-$1.511, $1.481, $1.312 Minor Support : $2.00, $1.967- $1.94 Major Resistance: $2.39, $2.44-$$2.502, $2.618, $3.00, $3.16
Failure at the conventional and trend line resistance on Monday and again early Tuesday (20 Week SMA) put August on the same track as its predecessor contract months which (as discussed in the Daily) a low volume decline into expiration. With one day left for prompt August before it goes to settlement, technically it does not matter what happens tomorrow unless there is some kind of high volume price surge (regardless of early Sunday night trade). Given that Friday’s close was the lowest daily close since May 1st and the lowest weekly close since prompt May settled at $1.619 on Friday April 26th, the chances of another “amply offered” expiration seem greater.
The bottom line is that prompt gas held a zone of support defined by the March high ($2.009), the mid – April high ($1.943, the high of week ending 04/12) and $1.913, the low of calendar May, as trading for the last week of August’s tenure ended, tenuously. For the first time since just after the “expiration” gap following May going off the board, prompt gas traded sub – $2…to $1.994, and September ain’t far behind ($.045 premium to August).
As the predecessors before it this year, the August contract was amply offer into the close last week and traded below $2.00 for the first time since last spring. Go into expectations in the Weekly section, so I will not repeat here. Suffice to say that the lower weekly close is a bearish indicator and none of my momentum indicators show the market as oversold (though approaching) so an am;y offered expiration should still be in the cards — though late Sunday trade has the market firming.
Major Support:, $1.848, $1.52-$1.511, $1.481, $1.312 Minor Support : $2.00, $1.967- $1.94 Major Resistance: $2.39, $2.44-$$2.502, $2.618, $3.00, $3.16
Don’t think I am going out on a limb here but I think the August contract is going to follow the previous contracts by being well-offered into expiration. What is getting more interesting is the Winter ’25 summer ’25 spreads during this decline.
Major Support:, $1.848, $1.52-$1.511, $1.481, $1.312 Minor Support : $2.00, $1.967- $1.94 Major Resistance: $2.39, $2.44-$$2.502, $2.618, $3.00, $3.16
Last Week’s lows continue to provide the near term support for the declines to help establish the low end of the range. This range should hold the majority of trade for the upcoming few weeks. Spread traders may want to look at some of the winter 2024/5 trades in the coming weeks as the low end of the range occurs.
Major Support:, $1.848, $1.52-$1.511, $1.481, $1.312 Minor Support : $2.00, $1.967- $1.94 Major Resistance: $2.39, $2.44-$$2.502, $2.618, $3.00, $3.16