Daily Call

Never a Serious Test

Daily Continuous

Startled that the declines never seriously tested the major support from early May and April ($6.50-$6.42) before finding support again and challenging the $7.00 zone. A couple of you have asked what I consider the expiration process — when I was trading cash and futures the 3-day close (setting up the Indices for the month) and what found out was that time period ran into some “issues” by the industry players. Now I look at the last 5 days of trade to watch for trends. Continue to rely on the 15 month trend of the prompt month rallying during the process. It is a trend until it isn’t. Should the trend break — still waiting for serious test of support.

Major Support: $6.426
Minor Support: $$6.60, $6.245,
Major Resistance:$7.66, $7.725, $7.816, $7.955

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Most of Monday Declines Stay

Daily Continuous

Long weekends with Sunday and Monday trading coming into Tuesday are always hard to interpret and this last weekend is no different — with prices off hard on Sunday and Monday only to find some buyers yesterday– supporting the move. After the recent collapse, do price consolidate for a day or two (which would be my expectation) or do they continue the declines. Went into the key area for support on the Weekly section, so I will not re-hash that here as the market is playing with key level for the rest of summer and the expiration trend of the last 15 months.

Major Support: $6.426
Minor Support: $$6.60, $6.245,
Major Resistance:$7.66, $7.725, $7.816, $7.955

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Light Trade Extends Declines

Daily Continuation

The last 15 expiring monthly contracts have been well supported into expiration after trading a low near the middle of the month (most of those lows have traded between the 15th and 21st but have traded as early as the 10th and late as the 25th).  July ’21 traded its expiration low on 06/21.  Expect July ’22 to continue that tendency.  Prices softened more in the light Holiday trade but the trend would suggest a low established shortly to be followed by support into expiration early next week.

Major Support: $6.426
Minor Support: $$6.60, $6.245,
Major Resistance:$7.66, $7.725, $7.816, $7.955

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Substantive Declines Modify Short Term Bias

Weekly Continuation

On Wednesday June8th, dropped over a dollar in just one hour.  Not to be out done, on Tuesday of last week, July surpassed that unusual event by declining $1.588 (from $8.609 to $7.041) in an hour.Substantial declines, by the prompt contract in the couple of weeks (all from a similar resistance area) should tell us something about the demand for futures contracts on either side on $9. 

This past week total open interest fell 42,829 contracts (through Thursday) bringing the two – week total decline to 84,767…the lowest number of futures contracts outstanding since Labor Day 2016.  It has been discussed here on several occasions, during the rally of ’22 that the level of open interest has contributed mightily to price volatility…both to the upside and downside.  Given the continued lack of participation in hedging, either long or short, expect continued price volatility. 

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Juneteenth Celebration

Forgot about the Holiday and not cash trading anymore was not reminded until I noticed the exceptionally light volumes for even a Sunday night- Will not be updating the Weekly section during today Monday as I will attempt to celebrate the Holiday. For now all I can say for those trading is expect a test of the major support for this last launching point for the current bull market at $6.4266 (see chart below). This chart will be key in my Weekly report coming tomorrow.

Weekly Continuation with Higher Highs and Higher Lows

Major Support:$7.36, $7.21, $6.426
Minor Support: $$6.60, $6.245,
Major Resistance:$7.66, $7.725, $7.816, $7.955

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Kinda A Range Day

Daily Continuation

Remember, the folks that have been buying each dip have just been smoked on the accelerated declines — so if you are looking for support on each dip — tread carefully. By the same token the market has not proven that each rally will be sold– guess we need some time to establish the “mood” of the traders and there machines.

Major Support:$7.36, $7.21, $6.60
Minor Support: $$6.60, $6.245,
Major Resistance:$7.66, $7.725, $7.816, $7.955

Similar to May, Prices Find Support

Daily Continuous

Suggested in yesterday’s Daily that you may want to take a day to observe, which turned out to be wise. Prices rebounded over 40% before calming into a range trade between $7.40 and $7.60 for the majority of the day. The market seems to want to develop a range trade, but not sure a storage release will provide that type of environment to develop.

Major Support:$7.36, $7.21, $6.60
Minor Support: $$6.60, $6.245,
Major Resistance:$7.66, $7.725, $7.816, $7.955

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Now That Is a Decline

Mentioned in the Weekly about the decline during the previous week in an hour– yesterday’s decline from $8.60 to $7.086 happened in 30 minutes. That is an example of everyone hitting the exits at the same time– it gets crowded. Needless to say that it occurred in response to some news about the LNG facility, but regardless– what is more important is what comes next. Last time we had a headline decline prices immediately rebounded the next day an recovered a chunk of the previous day’s declines. Not sure this decline will find the recovery of last month so it may be prudent to sit this decline out for a day and see what happens.

Major Support:$7.36, $7.21, $6.60
Minor Support: $$6.60, $6.245,
Major Resistance:$7.66, $7.725, $7.816, $7.955

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Wild Volatility

Weekly Continuous

Last week was quite something as a new Q2 high was traded on Wed, through the May high (prompt gas has now traded $6.128 or 173.3% above the December 30th – “Q1” low) and then through last week’s low. On Wednesday July dropped $1.119 (from 9.546 to 8.427) in just an hour. Yee Haw.

In past weeks the historical seasonal pattern of prompt gas between around the Memorial holiday (05/15 and 06/15) has been discussed. Over the years prompt gas has consistently traded a pre – Memorial Day high, fallen to a post – holiday/early June low and then rallied into mid – June. June before going off the board and July since has essentially followed the historical script with astounding and uncharacteristic volatility. The ten – years average of early June rallies is 16.65%. From Thursday’s (06/09) low July rallied 14.1%.

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Close Right On Trend Line Support

Daily Continuous

No stranger to wild rides — July started down, blew back up to nearly $9.00 only to find a few folks interested in selling there. From there it was immediate collapse below the open and finishing down on the day. Been discussing the volatility in this market and it is not leaving me wanted. Yesterday close just on the trend line support that has been discussed here for a couple of months— does it break below which would suggest a test of the earlier lows just above $8.00 or preform another bounce and off to the races.

Major Support:$8.283-$8.24, $8.12, $8.04
Minor Support: $8.065, $7.69,$7.36,
Major Resistance:$8.98-$9.00, $9.447, $9.60

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