Daily Call – Page 90

Solid Rebound Off of Trend Line Support

June 2, 2022June 1, 2022

Not even a hard test of the support line drawn from the March, April and May low of continuous prices– but prices rallied significantly off of the weak test, creating a near term support for the monthly range. Suspect prices to rally up to the $9.00 area (early May high)– not convinced it will chase the calendar May high, created during expiration.

Major Support:$8.283-$8.24, $8.12
Minor Support: $8.065, $7.69,$7.36,
Major Resistance:$8.916, $8.996, $9.60

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Testing Trend Line Support

June 1, 2022May 31, 2022

The Holiday weakness declines expanded the 5+% decline, taking prices down, getting near the trend line support (March and April lows in the chart above) that has been mentioned here for a while. The key is a break below that holds on a daily closing basis. A test and rally from will provide additional gains but a break down on a closing basis will likely create a test of the $8.00 area and just below.

Major Support:$8.283-$8.24, $8.12
Minor Support: $8.065, $7.69,$7.36,
Major Resistance:$8.916, $8.996, $9.60

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The Trend Is Your Friend — Until It Isn’t

May 31, 2022May 30, 2022

No surprising last week that June gas was well – bid into expiration and June was the fifteenth straight contract to enjoy increased buying during the last few days of its prompt life. What was surprising that the last support took prices through the early May high for June gas. The recent trends have had support tested after the start of trade month and last month was no exception as, June gave buyers a chance to buy weakness when it plunged from the aforementioned early calendar May high. As long as the tend and process of higher lows and higher highs (a primary characteristic of a longer term trend and discussed here for several months) continues it is likely that there will be a brief correction to the July prompt in the coming weeks. Whether it falls $2.566 (like prompt June gas) in less than three trading days, remains to be seen.

History tells us there is a consistent pattern that brackets Memorial Day Holiday. That pattern has, prompt gas setting a high between mid/late May and then declines to an early/mid – June low then rallies toward an early summer high. The average of the declines since ’00 is 11% – 12%. The 10 – year average of rallies from June lows is 16.65%. From the high traded last week at $9.447 to the low on May 27th ($8.285) represents a 12.3% decline well within the average. Not stating that the Holiday low has been established, but the current decline has met the average decline.

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First Day As Prompt — Weakness

May 31, 2022May 30, 2022

Friday’s trade provided a little weakness and was extended in the light Holiday trade on Monday. Go into expectations and the upcoming trend that may continue and “rhyme” with the happenings in 2008 as well as other potential outcomes — but this week and next are going to provide some valuable insight as the the early summer action. The declines from the high’s last week ($9.40) down to the low on Friday ($8.285) have already met the average spread surround the Holiday period and with the market opening lower late Monday night– perhaps the Holiday related low has not yet been achieved. Continue to expect market volatility in the upcoming week and would be keeping trade horizons short as recommended for nearly a month.

Major Support:$8.548, $8.32, $8.283-$8.24
Minor Support: $8.065, $7.69,$7.36,
Major Resistance:$8.916, $8.996, $9.60

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Expiration’s Well Bid Continue

May 27, 2022May 26, 2022

Though collapsing at the end of trade– the expiration was well bid as prices were $1.00 higher than last Friday following three up days and only one declining day (expiration day). July takes over as prompt and history leads to the expiration of some sort or retracement before or just after the Holiday. Some how — I don’t see traders selling into the Holiday weekend, but trade is likely to be light regardless.

Major Support:$7.663, $7.50., $7.00-$6.855, $6.411-$6.392, $6.247-$6.278, $5.27-$5.199, $5.001, $4.40-$4.26, $4.187
Minor Support: $7.722- $7.69, $6.00, $5.063, $5.04, $4.88, $4.60-$4.557
Major Resistance: $8.996, $9.60

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Startling Response to the Break Above

May 26, 2022May 25, 2022

The trade got they were seeking as prices jumped over $9.00 and got the short covering in the option expiration market. The market could not hold all of those gains during the trade as once the shorts were out — not a lot of buyers remained. Expiration is upon us and who has a clue as to what will happen as fundamentals haven’t changed in 3 weeks and the technical targets just seem to get run over.

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Keeps Trying

May 25, 2022May 24, 2022

Per the commentary yesterday — traders tried hard with the classic (now days) early morning rally up to $8.93 only to retrace when the rest of the trade got into the office. Not giving up on the concept that the trade is going to utilize the history of expiration’s to break above the resistance levels just below $9.00.

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Is Market Setting Up For Breakout

May 24, 2022May 23, 2022

Spoke about the trends in the expiration process in both the Daily and Weekly sections– had no clue that the market would further the trend another month (in the first day)– but it seems like that is the idea. Cannot jump on the July or August contract at these levels currently, though. Not enough volume, the ATR (discussed in the Weekly) is in an historical danger area, and the trade around Memorial Day Holiday, has shown weakness either side of the Holiday, historically. That does not prevent aggressive folk from taking a position during the day only to leave at resistance. That said, the move yesterday does provide the question of whether the trade is setting itself up for a break out above the calendar May high, either during expiration or just after as the July contract is trading at an $.08 premium to June. Should a break above occur– let the short covering occur — don’t chase– wait for the Holiday weakness to provide better opportunities (if it does). If it breaks down chose the level you are comfortable with to initiate length.

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Expiration — You Know the History

May 23, 2022May 22, 2022

The Sunday night trade was subtle and quiet — what gives. We are headed into expiration of the June contract and we all know what the trend of expiration’s over the last 15 months, perhaps the contract will have a brief extension of the declines from last week, but read the Weekly for more details, as the declines may be limited.

EOM We All Know the History

May 23, 2022May 22, 2022

June closed with a new contract high weekly close at $8.083 it was also a new high weekly close on continuation basis and was above the April high. While the soon to expire prompt posted a weekly gain ($.420) being the third higher weekly close of the four Fridays during its tenure, the week experienced three straight lower daily closes on (Wednesday, Thursday, and Friday for the first time since early March.

While volatility remains extreme, this week the 15 – week ATR (average true range) calculation was $.986 (down from $1.107 on May 6 which was the highest since November ’06 (see Weekly chart below). Regardless of the volatility, June has made little sustainable upside progress over the last month. June closed at $7.958 on April 18th, at $8.043 on May 6th, $7.956 on 05/16 and Friday at $8.083.

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