10-29-14 was down -$1.47 and the model projects that the CME Index component for the 10-29-14 kill will drop between -1.30 and -1.60. The Index/ZZZ gap settled yesterday at 4.50.

Each morning as I see the projected component change come in down I keep thinking that the gap is headed for Zero but the traders come along and take the ZZZs down a notch and we still end up with a fair sized gap.

Today might be different.

Today might be the day when the component drops and traders push the ZZZs higher and the gap takes another step toward closing.

On average over the past ten-years, from this date until the ZZZs go to cash settlement, the index has gained 0.45.

But averages don't mean much this time of the year.

It is the "Here and Now" that counts.

I'm wondering, does the strength in the cutouts yesterday indicate that we have hit bottom and we are now going to work around this level for a while before we begin to head higher?

Maybe!

But I think there is still some selling anxiety on the part of producers that will push the Index a little lower before we hit bottom.

So I am holding a couple of short ZZZs and sticking with the short Z/G spreads thinking the will dip below ZERO before we get to cash settlement. They almost always do.

Best wishes,

dhm