After a briefly checking below support at $4.00 and then back up into the low $4.10s, natural gas futures limped lazily sideways for much of the session Thursday as trade buying met almost equally with fund and local selling. At the closing bell the July contract was 7.4 cents lower for the session at $4.038. Estimated volume was relatively light, with only 67,994 contracts changing hands.

Sources were surprised by the market’s ability to rebound from such a negative open, adding that a close beneath $4.00 would have set the stage for further losses today. According to local technician Ira Hochman of New York-based Trot Trading, Enron was seen as a “good buyer on the early rebound,” which attracted several key local traders to join in. However, another large but unrecognizable commercial account was waiting at $4.11 to stifle the rally, and locals were quick to liquidate their longs.

For Cynthia Kase of New Mexico-based Kase and Company the three-day spike higher has done little to dissuade her from her bearish stance. “The threshold for the correction was $4.48. A move above that level would have confirmed a switch to a more neutral to bullish outlook. We only got to $4.44, however, and therefore the market remains negative.”

Baring a break above yesterday’s $4.13 high in the overnight Access session, she looks for a close beneath $4.00 today to spark a sell-off down to the $3.67-70 area next week. Once there, the market will likely be in for a little battle as bears attempt to press the market to new lows.

On the other side of the coin, Hochman saw supportive buying just beneath $4.00 Thursday in conjunction with 61.8% Fibonacci retracement off the recent $3.67-$4.44 July range. While Hochman admits a close beneath $4.00 would be negative, he maintains that only a break of his momentum number at $3.87 would turn him bearish. Conversely, a move back above $4.08 could pave the way for a retest of the $4.50 area, he reasoned.

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