Following a lackluster rally attempt last Thursday, bears in the natural gas pit reasserted themselves Friday, pressuring the spot month lower for the tenth time in the last eleven trading session. Buoyed by overnight short-covering, the June contract was fast out of the chute at the opening bell, as it broke above Thursday’s $4.55 high. However, the buying pressure dried up at about 10:00 A.M. (EST) leaving the market susceptible to a sell-off. At the closing bell, June was 3.7 cents lower at $4.490.

With little in the way of fresh fundamental news or data over which to quibble, traders were left to focus their attention on technical details of trading late last week.

Bulls would like you to believe that the market’s inability Friday to retest the $4.44 low etched both Wednesday and Thursday, was a victory in and of itself. They also were quick to note that the June contract managed a higher high on Friday.

Bears on the other hand, have momentum on their side, and that has their sights focused on some prominent historical price levels. Notched almost exactly six months ago, the Halloween-day low of $4.38 has been like a homing beacon for bears ever since the market began its slide in January. Now that prices have come so close to testing that level, many traders believe it is a forgone conclusion this week.

However, for Peter Hattersley of New York-based Rafferty Energy Group, the question is not whether it will, but what the market will do once it gets there. “We see $4.38 as a very pivotal area. If prices hold, the market could rebound higher and possibly look to retest resistance in the $4.85-90 area. However, if prices fail, we could see some pretty significant follow-through. The next levels of support fall in at $3.85 and $3.61, which are previous highs from the weekly continuation chart dating back to Oct.-Nov. of 1997.”

©Copyright 2001 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.