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Range-Bound Market Keeps Traders Guessing

Range-Bound Market Keeps Traders Guessing

The futures market began the week in much the same fashion that it concluded last week-quiet, range-bound trading where neither bull nor bear could make much of an impact. After notching up to a $2.23 high late in the session Monday, the August contract filtered lower to settle at $2.207, a 2-cent gain for the day.

Traders' opinions remain mixed as to where the market will trend from here. Despite being bullish in the long run, Tom Saal of Miami-based Pioneer Futures does not rule a retest of support at $2.10. On the upside, he feels the number the bulls need to beat is $2.25. Saal maintains that the most surprising thing about the market right now is its lack of volatility. "The Commitments of Traders report showed a huge change in positions in this market over the past couple weeks. Funds reversed their positions [long to short] more than 50,000 and commercial traders were right there buying up contracts. A year ago a change of that magnitude would have brought about a big price move, but now it could barely move the market 20 cents." To what can that be attributed? "The orderly nature with which the funds have liquidated their longs shows that natural gas is starting to exhibit characteristics of a maturing market," he reasoned.

New Mexico-based Kase and Company agrees with the bottom of his price range-$2.10, but gives the market a 50% chance of testing $2.32 in the short-term. In the long term, they favor an eventual move higher.

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