After watching the market slip a whopping 10% in a fierce Mondaysell-off, bulls dug in their heels yesterday and were successfulavoiding July’s first sub-$4.00 settlement since June 7. Afterprobing to its $3.96 low on the day, the prompt month received awave of bargain-hunting that lifted it to a $4.107 close, up 4.4cents for the session.

While some traders were still stunned by Monday’s price erosion,others were quick to jump at yesterday’s apparent buyingopportunity. “Fundamentally, the market has not changed —theprice is just 50 cents lower,” a Chicago trader rationalized.

Another trader was quick to note that Tuesday’s small uptickplaces prices right back where they were a week ago. “This has beena price roller coaster. Last Wednesday we traded from $4.095 to$4.20 within minutes of the release of the storage report. Everyonewas short. Even though the report was perceived bearish, there wasjust no one left to sell it.”

In contrast to last week’s storage report, the figure to bereleased this afternoon is expected to take on a bullish hue asmany feel it will not only fall short of last year’s 85 Bcfinjection, but also the six year average for this week of 89 Bcf.

While many traders eagerly await tomorrow’s fresh bounty offundamental data, Cynthia Kase of New Mexico-based Kase and Companyremains transfixed on technicals. “This market remains constructiveas long as it can hold above $3.90,” she said. On the upside, Kasetargets resistance at $4.28 and then again at the life- of-contract high at $4.58. Above previous highs, she identifies majorresistance at $4.72, which corresponds with the end of wave 3 underElliot wave analysis. “With the way the market has been behavinglately, prices could move much higher, possibly as high as $5.20 or$5.80,” she warned.

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