Daily Call

Prices retreated a little during options expiration, but nothing conclusive was determined. The market is defining a “new range” and how it determines the high side and low end has some development yet. At any rate, and expiration on the same day as the storage report is likely exciting.

Major Support: $4.903, $4.716, $4.705-$4.68
Minor Support
Major Resistance:$5.32-$5.37, $6.314, $6.456, $6.74, $7.18, $7.532, $7.71-7.75, 8.021,

While the spread came in a couple of pennies at the time of this writing, I am still concerned about adding positions, whether long or short, while the intentions of the market deciding on the differential (closing or ignoring until Dec becomes prompt). Need to be careful and cautious during this period. There are a couple of different ways this game can turn out from a technical perspective and they revolve around the highs of last week, which coincides with the gap from last week.

Major Support: $4.903, $4.716, $4.705-$4.68
Minor Support
Major Resistance:$5.32-$5.37, $6.314, $6.456, $6.74, $7.18, $7.532, $7.71-7.75, 8.021,

As alluded to, the over sold condition of the market extended early Monday morning to find support and develop a counter trend rally. Nothing major but a reversal day was over due for this market. How far does it proceed is anyone’s guess during the expiration process. After 5 consecutive declining days, it should be expected that prices rebound 33-50% of last weeks declines. More interesting to me is the dramatic and large spread between the Nov and Dec contract. During last week’s decline this differential got large (see chart below).

That differential blew out last week, expanding 25%. What happens— does Nov chase Dec during expiration of does Dec collapse and give up the premium after becoming prompt. My best guess is a combination of both.

A few days ago I mentioned that in spite of the declines the market remained in a “bullish” bias. That assessment was made due to the fact that price action had not closed below the lows from last July (ending a series of higher highs and higher lows). That came to an end yesterday as the market broke below the previous lows only to rally and close on the July lows. Mentioned a week ago that the run had encountered serious “technical” damage when prices broke though the support from $7.40 and was confirmed last week and on Monday when prices broke down below $6.40. It has been a sell the rally all month (Oct) and will continue to be so until the over-sold bias gets corrected. That correction may be very ugly when it occurs for the bears.

Major Support: $5.38-$5.35
Minor Support $5.40-$5.45
Major Resistance:$6.314, $6.74, $7.18, $7.532, $7.71-7.75, 8.021, $9.05-$9.12,$9.35,

The low end of the range continues to develop as prices lost another $.30+ and show little signs of stopping. Last week had weakness going into the storage report that everyone knew was going to be bearish and it was so prices rallied. HuH. Have no idea what the expectations are for tomorrow but I can tell you the market seems to be expecting a massive injection, combined with no winter, combined with price caps in Europe — folks we’re headed to $0.00 (pardon my sarcasm but some of my relentless bear traders are convinced). Sell the next rally or buy this dip — just not sure where you want the stops except for the lows from July ($5.35-$5.38).

Major Support: $5.38-$5.35
Minor Support $5.40-$5.45
Major Resistance:$6.314, $6.74, $7.18, $7.532, $7.71-7.75, 8.021, $9.05-$9.12,$9.35,

Not sure what you fundamental folks are expecting on Thursday, but the “big” number may finally let us define the low end of the upcoming range trade. Should it be around $5.65 that would set up the potential for a nice $.75 range that will provide solid trading gains. Market is not in the extreme zones in the market momentum indicators which can announce a “change” in direction (though briefly). Be patient and let the market define itself. Believe it or not, dating back a year — the market continues to have a long term bullish bias — granted that is hard to accept after the last $1.00 decline.

Major Support: $5.623,
Minor Support $5.548, $5.40-$5.45
Major Resistance:$6.314, $6.74, $7.18, $7.532, $7.71-7.75, 8.021, $9.05-$9.12,$9.35,

Didn’t see that extension to the downside. Shaved my short positions last week on support test — then proceeded to get stopped out of a little length from Sunday night. Obviously, shaving the short left $.40 on the table but will get the opportunity replay later this winter. Not sure where the low end of the new range will be –trade over the next few days will define as the market is hitting extreme zones in the momentum indicators. Needless to say– the upside of the range will be the gap in both the weekly and daily charts.

Major Support: $6.02, $5.623,
Minor Support $5.548, $5.40-$5.45
Major Resistance:$6.314, $6.74, $7.18, $7.532, $7.71-7.75, 8.021, $9.05-$9.12,$9.35,