All the ingredients were right for the futures market to spirallower yesterday-a softer cash market, continued bearish weatherforecasts, and an abundance of ready-to-expire March $1.65 and$1.70 put options. But for some reason, all of those factors werenot enough to inspire a sustained round of selling, leaving theMarch contract to chop to either side of unchanged before finishingwith a 0.6-cent gain to $1.71.

A Houston based marketer was at a loss to explain why thefutures market did not slip lower yesterday following Monday’s movebelow key support. “The utilities are as good a seller in the cashmarket as anyone and it will take prices dipping into the lower$1.60s to turn them back into buyers. Eventually, I think cashoffers will have to come down to meet those bids and it will thefutures market that will be forced to follow.”

Tim Evans, of the New York-based Pegasus Econometric Groupagreed but takes a less fundamental approach. “Technical analystsare almost always in agreement that the larger the consolidationthe bigger the move on a breakout. After trading in awell-established equilibrium level in the $1.80s for so long, themove lower is certainly bearish.”

However, Evans warns that although the trend is down, the onlything you can bank on in today’s expiration-day trading isvolatility. “The March settle will be a function of the remainingorder balance and who is left either short or long.” But watch out,he warns, because last-day trading is often streaky. Typically youwill get at least one bounce and one dip as people exit out ofpositions. The key is to realize prices can turn around on you veryquickly.

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