Like a monster at the end of horror movie that refuses to die,natural gas futures sprung back to life Friday following Thursday’squiet trading session that led some to believe the bull-run wasover. It didn’t take the market to prove them wrong Friday, as theJune contract gapped higher at the open and then erupted 11.5 centsto close at $3.825.

“You wouldn’t think there could be many shorts at the end of aweek like this, but short-covering is exactly what we saw out there[Friday],” a trader said. Those shorts, he continued, wereinitiated Thursday by traders looking to take advantage somepre-weekend, profit-taking. “When we gapped higher on the open,they were forced to cover.”

Although the market checked lower just long enough to fill inthe chart gap down to $3.74, the bulls had set the tone for theday. Locals were seen as active buyers Friday, sources said.

Whether continued buying was a result of the market’s auspiciousopen or just delayed follow-through on the heels of Wednesday’s24-cent spike, there is little doubt traders will be watchingMonday’s open very closely, and for good reason. Friday’s $3.84high, notched moments before the closing bell is significantbecause it falls just short of the $3.85 high reached back inOctober 1997. For many traders, prior highs offer good levels ofresistance. If breached, however, they can turn into springboardsas the prices trip buy stop loss orders placed just aboveresistance in an attempt to protect traders’ short holdings.

“We are in an interesting position up here. It seems ludicrousto get long up here, but there is the real chance we will not onlygap higher on the open Monday, but also gap above the resistance at$3.85,” said Ira Hochman of New York-based Trot Trading Corp. “Thismarket is ready to test $4.00 and $4.31.

“[This market] has formed a good base down between $2.50 and$3.20. We could go much, much higher in the next couple months.There was a lot of activity in January $8.00 [call options] overthe last couple of days. The bulls are really coming out,” he said.

In daily June technicals, support exists at previous highs at$3.73 and $3.74. Resistance is seen first at the $3.85 high aheadof the psychologically important $4 level. A 100% extension of the$2.08-$3.195 trading range that bounded the market from November1999 to the beginning of May offers another layer of resistance at$4.31, according to Hochman.

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