Daily Call

What Winter Brings–Trade Takes Away

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What took prices higher got eliminated yesterday as prices declined to close the gap from Monday, only to find some support at the end. Still remaining in the higher third of the range prices have traded this month– there is little to trade until the market decides to trade on winter or the LNG facility staying offline indefinitely.

Major Support: $6.39, $5.61-$5.44, $4.716, $4.705-$4.68
Minor Support: $6.18, $5.47, $5.337
Major Resistance$6.687, $7.038 $7.19-$7.221, $7.42, $7.532, $7.60-7.75, 8.021,

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Guess Winter Is Here

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Two days in a row that a rally off of changing patterns in the forecast have kept prices elevated. Lots of folks (fundamental) are convinced that the winter will not provide enough to offset the dry gas production gains made during the last few months– so I have been told– I have no clue because I choose not to get whip-sawed by following the swings on forecasts. From the technical perspective– the market tested and set a lower low in October then promptly reversed. Late last month (into December) prices again collapsed but could not even test the lower low from October, before finding support. Now we have a market rebounding, seemingly wanting to test the highs from last month between $7.42-$7.60. This will get interesting if the forecasts continue to support the run.

Major Support: $6.39, $5.61-$5.44, $4.716, $4.705-$4.68
Minor Support: $6.18, $5.47, $5.337
Major Resistance$6.687, $7.038 $7.19-$7.221, $7.42, $7.532, $7.60-7.75, 8.021,

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Weather Enthusiasm Holds During Trade

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The large gap opening was exciting but the trade during the day retraced a large chunk of the gap, but not closing the gap. Would expect the gap to close during the day sometime this week, unless the forecast remain cold longer in the month. Mentioned the $7.00 area yesterday and that will continue to be the key are of resistance, all based upon the weather forecasts.

Major Support: $6.39, $5.61-$5.44, $4.716, $4.705-$4.68
Minor Support: $6.18, $5.47, $5.337
Major Resistance$6.687, $7.038 $7.19-$7.221, $7.498, $7.532, $7.71-7.75, 8.021,

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After Gap Down, Prices Recover During Week

Weekly Continuation

January opened with a gap sharply lower from the previous week’s close at $6.281 to $5.900, through support defined by a series of lows traded by January gas between 11/09 and 11/16 ($6.131 – $6.260) and January’s November low ($6.011). The downside momentum generated by the exceptional gap triggered a substantial volume increase and a near immediate test of the continuation November low ($5.614 corresponding to January’s October low, $5.645). On a daily closing basis, prompt gas held the November low on Monday ($5.624 vs $5.614) but trade suggested that those lows were vulnerable to test the June/July lows $5.325 – $5.357. Last week’s low was $5.337.

Prompt January held the support and reversed higher but the odds of closing the weekly continuation gap left on Monday, which remained open between $6.052 and$6.221 were so remote the potential was not even mentioned in the Daily. Sure enough, it was and then some. In a year of improbable occurrences (the first ever annual high during calendar August, so far, for example) January rallying $1.054 after a high – volume gap down followed by the test of lows traded during the summer was one of the more near – term remote probabilities.

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Gap Down — Now Gap Up

Last week prices gapped lower on Sunday night only to extend declines later on Monday and Tuesday. This week the market has decided to gap higher on Sunday night. Last week the market spent the week retracing the declines– not sure it will happen this week (retracing and closing the gap created on Sunday) but with natural gas nothing is impossible. Welcome to the world of trading a commodity based on weather forecasts. Due to that relationship — it would be wise to expect severe volatility in the coming weeks. Evaluate the range that trades today for location to placing positions and expect the $7.00 area to bring some sellers– whether enough to blunt the run will have to be determined.

Major Support: $5.61-$5.44, $4.716, $4.705-$4.68
Minor Support: $6.18, $5.47, $5.337
Major Resistance:$6.45-$6.48, $6.687, $7.19-$7.221, $7.498, $7.532, $7.71-7.75, 8.021,

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Tried To Close Gap

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Did not see that rally coming off of a bearish storage report–once again when folks expect a bearish report and set themselves up for a negative report and they get it — there is no follow through. It happened a couple of times last month when expectations were met(bearish report) but the market had already sold the news– Prices went up after the release. Can’t say that was the result yesterday– but the move up took out some stops and left me curious of what this market is saying. The gap did not close but got with in a few pennies before retreating– the gap would be the place to initiate positions but prudence has this trader waiting until clearer intentions become prevalent.

Major Support: $5.61-$5.44, $4.716, $4.705-$4.68
Minor Support: $5.47, $5.337
Major Resistance:$6.221, $6.45-$6.48, $6.687, $7.19-$7.221, $7.498, $7.532, $7.71-7.75, 8.021,

Solid Bounce Off Support

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Prices have jumped in the late trade and are starting to challenge the gap from Monday and last week. Not sure what that is all about as the trade is on light volume and in front of the storage report (all my fundamental friends have told is bearish). As spoken previously, sell the rallies but keep stops very tight as we are still in winter and no one knows what the forecasts will bring.

Major Support: $5.61-$5.44, $4.716, $4.705-$4.68
Minor Support: $5.47, $5.337
Major Resistance: $6.45-$6.48, $6.687, $7.19-$7.221, $7.498, $7.532, $7.71-7.75, 8.021,

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Prices May Be Developing the Low End of Range

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After dropping over $2.00 in six trade days, price declines slowed yesterday. This may lead to a brief (but potentially violent) rally. Would wait for that rally to initiate new short positions– but remember prices are subject to weather forecast changes– so keep some stops tight to the new shorts.

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Wow – Declines Explode and Create Gap

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Not much to say but that is why you use stop loss orders last week. We came in today and prices were below $6 and headed lower. Trading down into the lows from late October, the market will develop the low end of potential new range. We now know that the high end of any range is the huge gap from the weekend which will get challenged, though likely later in the winter or next year.

Major Support: $5.72, $5.61-$5.44, $4.716, $4.705-$4.68
Minor Support: $5.47
Major Resistance: $6.45-$6.48, $6.687, $7.19-$7.221, $7.498, $7.532, $7.71-7.75, 8.021,

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Bias Switch

Weekly Continuous

The break down of the trend line (mentioned on Friday) was a clear signal that prices were headed lower. That is why some of these technical levels are so important– they signal break down’s or break out’s. From there the question remained would the break out area around $6.45 hold which it did momentarily before capitulating, opening the door for prices to collapse another $.20. It is clear that the historical trend of weaker prices into early December remains well in place. The consensus of technical indicators had made steady, incremental progress since late October, gave up most of that improvement and retreated to neutral with a price negative bias.

Market internals were mixed during the past week but not nearly as weak as one might be expect given January’s reversal lower, average daily volume was much less than during Thanksgiving week by an estimated 90,000 contacts. Volume is supposed to expand if a substantial price move is sustainable.

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