The third time was a charm yesterday for bulls in the gas pit atNymex as locals and technical traders covered shorts en masse afterdiscovering a technical blip on their charts. After thrice testingand failing to develop beneath the $5.74 level Wednesday eveningand yesterday morning, the market rocketed Thursday afternoon, ledby a March contract that rumbled 67.3 cents higher to close at$6.38.

Local technician Ira Hochman was quick to point to the paucityof selling that occurred Wednesday afternoon when prices dippedbelow the $5.74 area as an indication that buyers were in control.This sort of chart formation, called a selling tail, is formed whenthe selling pressure begins to wane and is followed by a strongreversal to the upside. Also of influence, Hochman continued, isthe fact that there were a lot of shorts that had rode the marketlower, “just waiting to cover their positions. When March retested$5.74 twice [Thursday] morning and then began to move higher, youhad to be a buyer,” he reasoned.

Looking back at yesterday’s price action, Susannah Hardesty ofIndiana-based Energy Research and Trading believes that the marketput in its first of two winter lows. “I was concerned [Wednesday]that all of the negative factors were already in the market, and[Thursday’s] price action confirms this sentiment.. With[Thursday’s] strong movement the third and half day stochastics arenow in buy signals. We recommend to continue to buy another 20% to25% of your requirements (through Sept/Oct. 2001) for the A1 Lowwhen [March futures] pulls back below $6.20.. All we will need willbe a change in the short-term weather forecast, to a more bullishscenario and prices will really start to climb,” she wrote in aspecial report to her weekly subscribers Thursday at noon.

As it turned out, those words were prophetic yesterday becauseshortly after her update was released fresh weather forecastscalling for cooler temps added to the technical buying frenzy.According a Houston-based risk manager, the AVN (aviation) modellooks for a large swath of Siberian air to invade theMidcontinent/Midwest and then eventually the Northeast U.S. bymid-month.

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