A chart gap, created when the one day’s high price is lower thanthe low price of a consecutive trading day is an eye sore to chartwatchers-they don’t like them and they will almost always try tofill them in by trading the market back between the “gap.” So itcame as no surprise when the first order of Friday’s trading wasfor the market to check lower in an attempt to fill in the 2-centgap left between Wednesday’s high of $2.18 and Thursday’s low of$2.20. It never made it. In fact, sellers could barely dent it andmanaged only a $2.195 low, before late buying lifted the promptmonth to just above unchanged Friday afternoon. May finished theweek at $2.226, a 0.1-cent gain for the day.

Aside from gap, trading was basically featureless Friday aslight long liquidation met nearly evenly with continued speculativebuying. Many traders, however, elected to sit on the sidelinesahead of the bi-weekly Commitments of Traders report releasedFriday by the Commodity Futures Trading Commission. For many thereport did not disappoint, confirming their suspicions that thenon-commercial segment of the market has increased their net longpositions. Primarily comprised of speculative funds groups andlocals, non-commercials held 33,582 net long positions as ofTuesday, April 20.

But despite that staggering long position, which will have to besold off at some point, Tim Evans of New York-based PegasusEconometric Group thinks prices still have some upside potential.”There is a distinct possibility that we will see some longliquidation ahead of the May expiration Wednesday. However, thatwill just free up buying potential for the June contract,” he said.Based on that, he suggests a strategy of selling the first half ofthe week and buying during the back half. “From there, Juneprices should coast higher. But ultimately the market will run outof buying support, which will put the market at risk of a muchlarger liquidation.”

However, Susannah Hardesty of Energy Research & Trading inGreencastle IN, citing a combination of low storage injections andconcerns regarding deliverability, remains firmly in the bullishcamp. Hardesty, noting that prices are moving according to herprojections, looks for continued strength into the May expirationWednesday. “Although the expected resistance for the May futurescontract is at $2.25, I would not be surprised to see prices higherthan that into expiration, to $2.35-40.” she wrote in her NaturalGas Weekly Report dated April 22, 1999.

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