Daily Call

Price Consolidation — Setting Up Q4 Run?

Daily Continuation

Prices settled down last week with lowest Average True Range since earlier in the summer. A bearish storage release didn’t bring the bears out and demand destruction from Ian didn’t extend the losses– not being a fundamental based trader– I have not way to explain. Technical data points look to the market testing support on the expiration of Oct below $6.50 only to see prices rebound– that spells a test of support and support held. Are prices destined to test resistance now? There may yet be another test of support with Nov as prompt — have to wait and see.

Major Support: $6.737-$6.727, $6.519, $6.504, $6.38, $6.02, $5.623,
Minor Support $6.42, $5.548, $5.40-$5.45
Major Resistance:$7.18, $7.532, $7.71-7.75, 8.021, $9.05-$9.12,$9.35, $9.40, 9.664–$9.67, $9.9

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Nov Shows Mild Strength in Early Trade as Prompt

Weekly Continuation

The expiring October rallied from $6.456 to $6.901 before going off the board at $6.868. This was the third highest expiration this year but $2.485 lower than September. The average settlement for ’22 is currently $6.783.

For more than a year and a half expiring contracts have rallied before going to settlement, discussed here nearly every month, October did so, but the substantial decline to an expiration day low (also the low for October’s tenure as prompt), before that rally suggests a departure from the long – standing pattern but not necessarily the trend.

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November Takes Control with Declines then Rally

Daily Continuation

Going into its prompt role- Nov had very early (overnight) strength only to loose it all and then some after the rest of the trade folks came in. Was a little startled the the fundamental folks were expecting a big injection (likely why the market was weak going into the release) they got what they were looking for – but could not extend the declines after the release. What is that all about– market running out of sellers??? Full disclosure, the declines were starting to challenge the 200 day SMA and the 40 week SMA at the lows — so perhaps prudence took over.

Major Support: $6.737-$6.727, $6.519, $6.504, $6.38, $6.02, $5.623,
Minor Support $6.42, $5.548, $5.40-$5.45
Major Resistance:$7.18, $7.532, $7.71-7.75, 8.021, $9.05-$9.12,$9.35, $9.40, 9.664–$9.67, $9.9

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One of the Calmest Expiration’s in 2 Years

Daily Continuation

That was interesting — prices showed strength on Monday going into the expiration — only to give it up on Tuesday and showed slight strength yesterday. Can’t call it a well-bid expiration, as prices closed last Friday at $6.828 and expired at $6.868. That is all irrelevant now as Nov takes over as prompt and is facing a large speculative short position, demand destruction from Ian, and potential sabotage on the pipelines from Russia to Germany. Be interesting to watch how this all works out. Forgot to mention another storage report which is going to be bearish (according to my fundamental clients).

Major Support: $6.737-$6.727, $6.519, $6.504, $6.38, $6.02, $5.623,
Minor Support $6.42, $5.548, $5.40-$5.45
Major Resistance:$7.18, $7.532, $7.71-7.75, 8.021, $9.05-$9.12,$9.35, $9.40, 9.664–$9.67, $9.9

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Calm Expiration???

Daily Continuation

This could b a unique expiration as compared to the last twenty+ monthly expiration. So far the current price is just about where it was when price started the week.– What no rally– not sure yet but a great trade position month after month may be coming to break. Does not mean that the trade behavior is not going to happen next month — just means that it may be subtle this month. We will see.

Major Support: $6.737-$6.727, $6.519, $6.504, $6.38, $6.02, $5.623,
Minor Support $6.42, $5.548, $5.40-$5.45
Major Resistance:$7.18, $7.532, $7.71-7.75, 8.021, $9.05-$9.12,$9.35, $9.40, 9.664–$9.67, $9.9

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Prices Firm Slightly

Daily Continuous

Prices extended lower yesterday only to find support and rally back slightly, closing the day near the highs of the day. This may be the beginning of the recent trend of expiration’s being well bid. Key for today is the options expiration so expect excitement at $7.00 and $6.75. Directional focus will be shown in the Dec, Jan, and Feb contracts as the market defines its upcoming directional bias.

Major Support: $6.737-$6.727, $6.519, $6.504, $6.38, $6.02, $5.623,
Minor Support $6.42, $5.548, $5.40-$5.45
Major Resistance:$7.18, $7.532, $7.71-7.75, 8.021, $9.05-$9.12,$9.35, $9.40, 9.664–$9.67, $9.9

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Technical Damage

Daily Continuous

There was significant technical damage last week and go into the results in the Weekly section. The damage does not end the bull market bias dating back to 2020 but it will make rallies beyond the now well defined resistance very difficult. We are headed into expiration and it is well documented that the market has a tendency to be well-bid.

Major Support: $6.737-$6.727, $6.519, $6.504, $6.38, $6.02, $5.623,
Minor Support $6.42, $5.548, $5.40-$5.45
Major Resistance:$7.18, $7.532, $7.71-7.75, 8.021, $9.05-$9.12,$9.35, $9.40, 9.664–$9.67, $9.9

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Exciting Week With Ramifications

Weekly Continuation

Contrary to the writings this summer, October tested the August lows ($7.532 – $7.550) and broke below as support could not hold that area. For only the second time in the last ten years, the August lows broke down in September. When there was insufficient sponsorship for near term gas to hold the well – defined support, October plunged to a low of $6.737, as trading for the week concluded . To a lesser degree, it took the rest of the maturity curve and strips followed the declines. Neither of the two previous violations of the August lows (in ’20 prompt gas traded an “outside” month reversal to the upside and, in the other -’15- prompt gas was in a downtrend already 18+ months old), appear to present an acceptable similarities for the remainder of ’22.

Serious, resistance has been clearly defined by multiple calendar month highs from May through September, all between +/- $9.40 and $10.028, but where is support sufficient to overcome the momentum built to the downside since the failed late August breakout? Since prompt gas first closed over the continuation 40 – week SMA in August ’20, the rising moving average has been tested multiple times recently at the July – Q3 low. Only during December ’21 has it been violated on a weekly closing basis for more than a single week. Currently the value of that rising moving average is $6.489. For several weeks there has been the exceptional separation from intermediate/long – term trend defining 40 – week SMA (the high weekly level was 55% above that Average). While it sometimes takes longer than we think to materialize, prices should trend back toward the mean mean is as close as it gets to a technical certainty. Currently the separation is 5.2%. It should be noted that before the July low was traded the week ending separation reached 2.6%. During that week prompt August traded +/- $.23 below the moving average, before prompt gas turned and rallied to a higher high.

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Another “Quiet” Day

Daily Continuous

Price action took another day trading in a quiet range considering the last few months. Starting high end and giving up the gains during the day only to find footing toward the end. This consolidation will set up the next move and there are no clues whether it was either up or down. The recent range between $8.25 and $7.50 is the market for now so trade accordingly.

Major Support: $7.55, $7.14, $7.078, $6.88, $6.754,$6.38, $6.02, $5.623,
Minor Support $7.35, $7.41, $6.42, $5.548, $5.40-$5.45
Major Resistance:$8.26, $8.32, $8.45, $9.021, $9.05-$9.12,$9.35, $9.40, 9.664–$9.67, $9.98

A Day of Consolidation

Daily Continuous

Prices quieted down yesterday and only traded in a $.34 range from high to low. Mentioned yesterday that the impact of fundamental information may be diminished during this shoulder season. Does not mean there may not be volatility but yesterday provided a brief hiatus to this summer’s radical levels and there may be additional quiet days coming.

Major Support: $7.55, $7.14, $7.078, $6.88, $6.754,$6.38, $6.02, $5.623,
Minor Support $7.35, $7.41, $6.42, $5.548, $5.40-$5.45
Major Resistance:$8.32, $8.45, $9.021, $9.05-$9.12,$9.35, $9.40, 9.664–$9.67, $9.98

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