Small Gain Puts Bulls Back at Helm
Feeding off strength from Tuesday's Access session gains, the
May contract was fast out of the chute Wednesday, quickly notching
a $2.08 shortly before noon. But for the fourth time in the last
five trading days, resistance at the $2.07-09 level held and
profit-taking in the form of selling became the theme of the
afternoon. The May contract finished at $2.024, just 1.1 cents more
than Tuesday's close.
Traders agreed the market continues to be technically driven as
evidenced by the low end of yesterday's range, which was etched in
the last hour of trading. "This market has come off its high and
now looks poised to punch through the $2.00 level for a retest of
the $1.99," a Chicago trader predicted yesterday afternoon. His
words were prophetic because shortly after that the $1.99 level was
tested but held as the low for the day.
Although many traders looked past fundamental features in the
open outcry session yesterday, few were able to ignore the impact
of a 2 Bcf storage injection for last week estimated by the
American Gas Association. Pre-report speculation generally centered
on a small net withdrawal; however, one industry report straddled
the fence by calling for either a small injection or withdrawal.
Tom Saal of Miami-based Pioneer Futures was somewhat surprised by
the net refill for the week, but maintains that the next week's
report will be more critical because it will be the first full week
Until that time, Saal feels it is more appropriate to look at
what the market didn't do. "We tested support below $2.00 again
today but there was no follow-through selling. Now the market is
positioned to test the upside again." He thinks the first test will
come at Wednesday's high of $2.08, which will be little more than a
speed bump to traders looking to fill the $2.11-19 chart gap on the
continuation chart dating back to November. The vehicle for this
rally? "Aggressive buying above the market by fund groups, who are
already long," Saal said.
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