“You can’t win the game if you give the ball away” was aseemingly logical but somewhat superfluous observation made byHoward Cosell on Monday Night Football back in the 1980s. If Cosellwere to have commented on the natural gas futures market yesterday,he probably would have said something like, “The market couldn’tmove lower because there was no additional selling.” And althoughthat comment would also have been redundant, it aptly describes thenature of yesterday’s price action at the New York MercantileExchange, where once early selling dried up, the market was free tobubble higher in near-frictionless trade. The May contract finishedup 3.2 cents to $2.128.

Sources agreed that locals were responsible for the earlyselling yesterday as they pushed the May contract down to the mid-$2.00s. However, Ed Kennedy of Miami-based Pioneer Futures felt itwas more appropriate to focus on what the market didn’t do. “Localsset the stage yesterday for the market to take back some of lastweek’s gains, but there was no bearish leadership from othersegments of the market. As a result, the locals were forced tocover their shorts into the close.” The prompt month rallied from$2.07 to its $2.135 high in the last hour and a half of trading.

Kennedy added that he was surprised there was not betterscale-up selling by commercial traders, who he feels have a vestedinterest in the market moving lower. He pointed to the latestCommitments of Traders (COT) report released Friday by theCommodity Futures Trading Commission (CFTC) which showed commercialtraders were net short more than 40,000 positions as of Tuesday,April 6. “If they aren’t going to sell this market then who will?If nobody else steps up, then the funds will have an easy timetaking this thing into the $2.20s before long.”

And Susannah Hardesty of Energy Research & Trading ofGreencastle, IN, agreed, and targets the first of her spring highsto come this week on a move to $2.20-25. Once there, she will lookfor sell signals on intraday stochastics to confirm an interim tophas been established.

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