Natural gas markets continue to be very bullish during the day on Friday, but we have almost no volume, so I would be a bit concerned about trying to buy here. Beyond that, temperatures in the northeastern part of the United States are likely to get warmer rather soon, and that will certainly drive down a significant amount of demand for this market. The market would offer a nice longer-term selling opportunity if we can’t break out to the upside, and I think the next obvious barrier will be the $3.50 handle.
I believe that the $3.35 level underneath is going to be support, but if we get a sudden change in attitude in this market, we should slice right through there. The rally that we have seen during the Friday session has been on incredibly thin volume, and that suggests that we aren’t going to be able to sustain a rally for very long. At the first signs of exhaustion, I’m willing to start shorting, and taking a chance on the longer-term negativity. If we break down below the $3.35 level, I suspect that the next target will be the $3.25 level. A breakdown below there then opens the door to the $3 handle. In the meantime, patience will be needed as we await a nice selling opportunity if we get one. If we don’t, and we can somehow break above the $3.50 level, it will be interesting to see what follows.