Expiration day at Nymex has been a bull-trader’s worst nightmarerecently because the last several contracts have been ushered offthe board amid a tempest of late selling activity. Septemberslipped 9 cents on its last trading day to cap off a 27.5 centprice decline for the week. Likewise, October and Novemberplummeted 15 cents and 13.6 cents to settle to either side of $2.00at final settlement. And although December’s fate is far fromsealed, Monday’s 6.6-cent losses and $2.097 penultimate settlementprompted traders to wonder if the market might be in for anotherround of expiration-day losses today.

But, if the market is able to trend lower today, it will have toresist short-covering pressure expected before the long holidayweekend. “Whether shorts cover Tuesday or Wednesday is the bigquestion,” says Ed Kennedy of Miami-based Pioneer Futures. “Localsare big bears and have pressured this market the whole way down.However, most speculators are out of December in favor of Januaryand February and don’t have to cover by the December expiry.”Despite the large number of short positions, Kennedy thinks themarket will at least test the $2.00 level today.

But a Houston marketer is not convinced the $2.00 level is injeopardy. He looks for most bidweek business to be completed todayand thinks Midcontinent cash prices will have difficulty droppingbelow the $2.00 level. “With current Midcontinent basis at six toseven back [under the December contract], futures cannot move muchlower without pushing December cash prices below $2.00,” hereasoned.

In expiration day technicals, December has support at $2.00.Resistance stands at previous support levels of $2.14 and $2.24, achartist advised.

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