Daily Call

Reversal in Prices — Provides Little Medium Term Impact

Daily Continuous

Went into the near term trends associated with last week’s reversal in the Weekly section for your review. Even with the $1.00 decline off of the highs on Friday — the marker remains with a bullish bias (last week closed significantly higher even with the decline). While strength on the open may occur — prices are headed for some consolidation and Friday does not reflect consolidation – rather profit taking. For well more than a year every prompt contract has weakened around mid month in its tenure, the earliest was March that traded its pre – expiration low on 02/11; the latest was May which fell from a 04/18 high at 8.065 to a 04/25 low of 6.345. Expect this June’s role as prompt to remain consistent with that pattern.

Major Support:, $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: $6.00, $5.063, $5.04, $4.88, $4.60-$4.557
Major Resistance: $8.47-$9.60

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Prices Reverse Off of A 13 Year High Trade

Weekly Continuous

Prompt May extended the rally from the previous meager test of its 20 – day SMA for six straight trading days, rising $2.191, before reversing. On Friday May fell more than a dollar from the highest price traded in 13+ years and ended the week back below the April high (perhaps significant). Despite the decline during Friday’s outside day reversal, prompt gas still finished the week $.799 higher.

The gas market is extremely overbought by most all of my metrics. The weekly MACD the primary lagging indicator (used sparingly here but monitored on an every week basis for the last thirty years) has exceeded its extreme reading coincident with last year’s high. Simultaneously, the weekly RSI, the primary leading indicator, is yet to confirm the April high (RSI should confirm the weekly high with a higher close).

Prompt gas is extended more than 50% above the intermediate long – term trend defining 40 – week SMA. Since (and including ’00) this is the ninth time prompt gas has been extended this far. Currently, separation from the rising moving average measures 60.8%. Last fall weekly closing prices remained more than 50% above the moving average for seven weeks and at the peak the separation was 67.5% before the decline toward the December low began. The one factor that each of the prior occurrences has in common is that once the regression begins the decline to the mean is rapid. Ten weeks after last fall’s peak extension prompt gas closed below the 40 – week SMA.

Prompt gas traded to three standard deviations above the twenty – week SMA for the third time in four weeks. Last fall there was a nearly identical sequence before prompt gas returned to the 20 – week SMA. Markets in definable trends typically respect shorter term moving averages. Without exception, every expiring contract for more than a year has settled above its 20 – day SMA. More often than not that relatively short–term moving average has been tested and held during the middle of the prompt and presenting a low risk buying point. Expect June to test its 20 – day during its tenure, before a rally into expiration.

Whether the short–term moving average continue to provide supports they did for prompts April and May, the most important factor is the long series of higher highs and higher lows that define the uptrend (discussed here for over two years) see chart below. Despite a weekly reversal from the April high and a decline from high to low of more than $1.70, prompt gas came nowhere near breaking that pattern. Violation of that April low ($6.345) would suggest a change in character for the gas market. Continue to expect prompt gas and the strips to find support above prior significant lows.

Weekly Continuous — Higher Highs and High Lows

Major Support:, $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: $6.00, $5.063, $5.04, $4.88, $4.60-$4.557
Major Resistance: $8.47-$9.60

Been Here Before

Daily Continuous

We were in a very similar position a couple of weeks ago, if you remember the chart below:

Weekly Continuous with Bollinger Study at 2 &3 Standard Deviations over the 20 Week SMA

When prices extend nearly three standard deviations above the 20 WK SMA– it is over cooked. Last time (last month) prices corrected nearly 20% before finding support. Not calling this the high, as prices can continue well beyond technical points — but trust me — there will be a correction. If you are playing this with length — rock and roll, I have retired from playing this market (even on a daily play) until some of the silliness recedes. BTW — I thought that was a bearish storage report — that is why I don’t trade on fundamental data points.

Major Support:, $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: $6.00, $5.063, $5.04, $4.88, $4.60-$4.557
Major Resistance: $8.47-$9.60

This Getting Too Rich

Daily Continuous

So prices reverse on Tuesday only to reverse on Wednesday another $.70+ gain from the lows on Wednesday. Anyone else beginning to smell something fishy associated with this run. Though it was still a higher high, regardless of the cod, and there doesn’t seem to be any price that is not worth buying from a risk standpoint. Pardon me, do it with your money as I will continue to intra day position and be out by the end of the day.

Major Support:, $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: $6.00, $5.063, $5.04, $4.88, $4.60-$4.557
Major Resistance: $8.47-$9.60

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Another Reversal After Clearing $8.00

Daily Continuous

A reversal yesterday after prices rallied above $8.00 to set a new high in this series of higher highs that the market is performing. Now — what — for the reversal to be more significant, the declines will need to continue and not find as many buyers at support (say $7.00). Wait and watch this week– play the day to day game and would not leave positions out there for several days.

Major Support:, $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: $6.00, $5.063, $5.04, $4.88, $4.60-$4.557
Major Resistance: $7.536, $8.065

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Rally Closes Above Resistance

Daily Continuous

One would have to think that the $8.00 level is in the couple of days trade. This time, the market may not be as over-bought as last time, but the price is already over the 2 standard deviation bollinger study but the previous attempt, prices were over 3 standard deviations over the 20 WK moving Avg. Still have $.50 to go but it is likely that the market will be at similar over-bought levels should it move there. Would keep trade expectations on a “daily” basis as holding for longer term may provide significant risk (see early April).

Major Support:, $6.855, $6.411-$6.392, $6.247-$6.278, $5.27-$5.199, $5.001, $4.40-$4.26, $4.187
Minor Support: $6.00, $5.063, $5.04, $4.88, $4.60-$4.557
Major Resistance: $7.536, $8.065

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Trend Continues With Strong Expiration – Weakness For a Day

Weekly Continuation

As expected, prices rallied into the expiration process, setting the week’s high only to give a chunk of the gains up as June took over as prompt. Was interesting for this observer to watch the Friday trade on a 5 minute chart as prices leaped up from $7.05 to $7.30 in a matter of 10 minutes . That action smells to this trader as the machines and the algorithms rocking the market (the same type of event happened last month during the $1.60 correction off of the highs). This type of activity can create serious risk issues for those of us the don’t have the machine based algorithms nor the quickness to respond to bid/offer spreads with volume. Not complaining, just wanting to make you better at understanding the potential risks in your trading.

Prompt June but again found support at the rising trend line and 20 – day SMA with value of the trend line being $6.785, the 20 – day SMA of June gas was 6.796…the low trade 6.805. Successive months have now held their 20 – day SMAs as the most recent series of higher lows has traded and provided low risk entry points.

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Similar Sunday Night Routine

Daily Continuous

It is not surprising after the 10 minute — $.20 run in prices on late Friday morning (discussed in Weekly section) that prices are showing strength in the early Sunday night action. Wouldn’t think that the “kids” would miss an opportunity like that. Ran all the way to the resistance that prices could not over-come last week– perhaps they will this week. A daily close above that high will bring $8.00 into target.

Major Support:, $6.855, $6.411-$6.392, $6.247-$6.278, $5.27-$5.199, $5.001, $4.40-$4.26, $4.187
Minor Support: $6.00, $5.063, $5.04, $4.88, $4.60-$4.557
Major Resistance: $7.346 , $7.422, $7.536

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Starts Similar to March

Daily Continuous

In reference to the Daily yesterday the price movement looks more like the action from March rather than April. Would not be looking to pound from a short side and as the market remains with a bullish bias currently. If you want to be short — look down to $6.66 (April low on Continuous chart) — if you want to be long look to yesterday’s high as an initial target for gains.

Major Support:, $6.411-$6.392, $6.247-$6.278, $5.27-$5.199, $5.001, $4.40-$4.26, $4.187, $3.972, $3.734
Minor Support: $6.00, $5.063, $5.04, $4.88, $4.60-$4.557
Major Resistance: $7.346 , $7.427, $7.536

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March or April

Daily Continuous

Yes, I realize it is May but wanted to show the choices that the market has for near term direction. When the April contract took over in March as prompt there was some early softness into a brief rally only to have prices correct back and in the middle of the month retest and consolidate as the low end of the range (short term). Calendar April (with May as prompt) had no such silliness and just took off to higher ground setting a series of higher weekly highs until prices got so over bought, that the $1.40 correction was imminent. What does June do– if it replays last month’s action — rest assure that the $8.00 area is in focus. Should the trade copy March — a retest of the mid-$6.50 area may be coming.

Major Support:, $6.411-$6.392, $6.247-$6.278, $5.27-$5.199, $5.001, $4.40-$4.26, $4.187, $3.972, $3.734
Minor Support: $6.00, $5.063, $5.04, $4.88, $4.60-$4.557
Major Resistance: $7.346 , $7.427, $7.536

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