Message-ID: <15042719.1075860930830.JavaMail.evans@thyme> Date: Thu, 13 Dec 2001 07:58:05 -0800 (PST) From: larry.pavlou@enron.com To: kent.miller@enron.com, kimberly.watson@enron.com, jo.williams@enron.com Subject: Technical Market View Cc: dave.neubauer@enron.com Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit Bcc: dave.neubauer@enron.com X-From: Pavlou, Larry X-To: Miller, Kent , Watson, Kimberly , Williams, Jo X-cc: Neubauer, Dave X-bcc: X-Folder: \Kim_Watson_Mar2002\Watson, Kimberly\Inbox X-Origin: Watson-K X-FileName: kwatson (Non-Privileged).pst Per our conversation yesterday on TW fuel sales, below are the general criteria I use in formulating my market view. Please note that these are listed in order of importance. 1. Continuation Charts: Looks like the recent move to 2.450 completed the -B- Wave down and we are currently in the -C- wave up of this larger -A- up; -B- down; and -C- up move. Specifically, within this -C- wave up: 2.450 to 2.854 = A up of -C- 2.854 to 2.630 = B dn of -C- 2.630 to ???? = C up of -C-; where 2.880 is minimum expected upside target, 2.960 is the pivot, and 3.035 is maximum expected upside target. 2. Spot - 12 Month Strip Spread: This study has thus far accurately called for a feeble rally this winter, with the downtrend continuing into January 2002. 3. Seasonal Price Patterns: Calendar January is the highest probability window for the low of the year, then spot tends to rally into late October, with two minor cycles: Summer pre-season rally: Typically bottoms in late January, and peaks from mid-April to mid-May. Winter pre-season rally: Typically bottoms in late September, and peaks in late October to late November. Conclusion: Criteria #2 and #3 point to prices continuing to slide downward into the first part of 2002. Criteria #1 infers significant resistance if prices rally into the 2.880 to 3.305 range. Short to intermediate term trend-followers will be looking to buy strength if we get a close > 2.960. On the downside, for each day prices don't close > 2.960, the bearish case for a continued decline to the 2.120 to 1.950 area will remain intact. Implied volatility is 84%, which is somewhat on the higher part of the volatility scale for natural gas and infers current prices wont stay where they currently are for long.