Futures Higher as Traders Position for Expiration Day
After posting 7.3 cent rally to kick off the week Monday, the
futures market found itself in a spirited see-saw battle pitting
price-optimistic bulls versus price skeptical bears Tuesday. In the
end however, the market sided with the trend as the bulls came away
with their fifth gain in as many days by nudging the May contract
3.2 cents higher to $2.331. The May contract expires today at 3:10
"Locals were very active in the market today," commented a
trader who said they were responsible for the push above $2.30
Tuesday. "There was a great deal of apprehension about owning the
market above $2.32. A few big locals were buyers above that level
and in doing so they have become extremely long." He continued by
adding that had it not been for their influence, the market might
have fallen under its own weight. "There was a vacuum below $2.31.
A move back under that level and buying might not have kicked in
until the mid to upper $2.20s," he reasoned.
A Houston marketer agreed, and added marketing companies were
somewhat reluctant to buy the market in the $2.30s. "There are
people who are scared to death of this thing. Some of them sold the
market at $2.25 and have already taken a big hit. What happens if
they buy it back and then it moves right back down to $2.25?" he
The $2.25-29 level, however, is a possibility, argues another
trader. "Cash will do its part in trying to keep futures afloat,
but in the end, May's last trading day will be decided by who is
willing to buy the May contract. Utilities might find value in
owning it, but prices will have to dip back into the $2.20s for
them to step up as buyers," he said.
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