Kim: 

I worked up some numbers with more direct application to Cal 02 for your meeting tomorrow. LP



Market View: Still count long term trend as down, with at least one more new low still ahead.  Issue is whether this low will be a marginal new low or open the gate for major new lows.   


Market Structure on Prompt Continuation:

4.581	If prices close > 4.581 without first breaking < 2.881, then long term trend shifts from bottoming to up.

3.350	If prices trade > 3.350 or close > 3.320, bearish case for new lows is greatly minimized, and long term trend shifts from down to bottoming.
3.320

3.085	Current prompt price.

2.615	Minimum downside target.

2.364	

1.915	Most bearish scenario.



Market Structure Application to Cal 02 Strip (Non-Basis Adjusted):

Since Cal 02 strip does not trade on a continuation, I use the 12-month strip continuation to derive a market structure for Cal 02.  Because most of the components of the 12-month strip at this time of the year are the same as Cal 02 components, the current price action for 12 month strip correlates quite nicely with Cal 02.  Below is the derived market structure for Cal 02:

4.774	Most bullish scenario.

4.271	

3.874	Using 3.723 as pivot point from 12-month strip, assume that if 12-month strip closes > 3.723, then Cal 02 should be trading @ 3.874.   

3.653	Current Cal 02 price.

3.240	

2.476	Most bearish scenario.