For the second day in a row Friday, the futures market was ableto shrug off sizable losses in the physical market to trade oneither side of unchanged. No fresh news was seen to inspire theNovember contract outside its unusually narrow 3 cent trading rangeand the market was left to settle at $2.164, a 1.2 cent loss forthe day.

With three trading days left until the November contract’sexpiration Wednesday, the market is now focused on whether, and ifso, in what direction the market will break out of its recent$2.030-235 trading range. Susannah Hardesty of Energy Research andTrading in Greencastle, IN, favors a move to the upside consistentwith her forecasted second peak of the fall high. Hardesty targetsthe $2.25 level as significant for November and feels a breakoutabove $2.25 would lead to renewed speculative buying. “If priceshit or come close to $2.25 near the end of the day, from 1:20 PMCDT, onward, there is a 85-92% probability for higher highs thenext day. If that happens, a breakout above $2.25 is likely, withfinal highs another 10 -15 cents higher.”

However, Tom Saal thinks the December contract is where the realaction is now. He feels if November is able to break out of itscurrent range it will be in response to either speculative buyingor selling in the December contract. “The key level to watch for inDecember is the 40-day moving average at $2.45. On Tuesday themarket settled above that level, but did not entice fresh buying.If the market were able to produce another settlement above the40-day, then the chances are good futures would continue higher.Conversely, if the market migrates too far below the 40-day, thenit’s a sell opportunity,” he said. The buying or selling would comefrom fund groups who are probably either flat or still a littlenet-short and therefore would be almost indifferent in going longor trying the short side again, he added. As of Tuesday, Oct. 20,the Commodity Futures Trading Commission Commitment of Tradersreport found non-commercial traders were net short over 12,000contracts.

In daily technicals, New York-based Pegasus Econometric Groupfinds support for November at $2.10-11, $2.03 and $1.86. Resistancestands at $2.25-27, $2.40, and $2.53-57.

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