Following Wednesday’s 50-cent plus sell-off, natural gas futuresfound at least a temporary bottom yesterday as traders got a headstart covering shorts before the holiday weekend. Gains were almostuniform across the board as buyers spread buying across all of thecontracts. The 12-month strip advanced 6.7 cents to close at $5.579and the March contract finished 7.6 cents stronger at $5.594.

After watching the market lose more than 8% of its value tocarve out a new two-and-a-half-month low Wednesday, traders werenot especially surprised by yesterday’s bounce. By mid-morningyesterday, the March contract had moved back up to a key technicallevel on the daily chart. A strong area of support for severalweeks, the $5.60-62 area quickly became a level of resistance whenprices flip-flopped lower Wednesday. When the March contractre-tested $5.60 Thursday, strong selling was seen to pressureprices lower, traders told NGI.

Another technical level to watch is the steeply slopingdowntrend line that has limited the market’s upside since thebeginning of the year. Tom Saal, of Miami-based Pioneer Futurescalls this Trend 2001 and notes that it is on a collision coursewith Trend 2000 — an uptrend line that described the market’slows throughout 2000. On a daily continuation chart, Trend 2001 isseen as resistance at about $6.08 and decreases at the rate ofalmost 9 cents a day. Meanwhile, Trend 2000 continues to creepupward at a little over a penny a day and is now located at about$5.18. While both are major market movers in their own right, onlyone can prevail. When pressed to choose, Saal favors thelonger-term trend and thus looks for the market to find support onmoves toward $5.20.

In observance of Presidents Holiday Monday, trading at Nymexwill close today at 1 p.m (EST) and not reopen until 7 p.m. Monday.

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