Friday, September 30, 2011

Traders end the quarter with personal spending and consumer sentiment news


The James' Report:  Professional Resources for Professional Traders


- Crude Oil Futures trading at Thursday’s Low, middle of larger range, inside day transition, buy this support @ PLOD and wedge lows

- Gold Futures trading in the middle of Thursday’s range, inside day, above highs of bear price channel, looking to sell short below PLOD, beware the narrow price wedge and fake-out breakout around the PLOD

- Euro Futures trading below Thursday’s lows, outside day, in the middle of the larger range, looking to buy at major support on the way down to 3357.

- Mini Russell Futures trading in the middle of Thursday’s range, inside day, beware the narrow price wedge, wait for the breakout, beware of failures.

- Markets in defensive mode with many market participants on the sideline due to month-end, quarter-end and fiscal half-year end conditions.

- Traders expect to see lower than expected Consumer Spending today in the US

- US Investors on the fence about the new ‘Buffet Rule’

- European shares tumbled in the session and seem on track to register the worst quarter since 2008 amidst global economic turmoil. Cyclical stocks declined led by luxury automakers such as BMW. Miners also continued to lose.

- China Sep PMI unchanged from Aug reading but third consecutive month of contraction. 

- QE3 increasingly coming back into the picture

 - Asian currencies have worst month since 1997 crisis as Asian equities experience largest quarterly drop in three years

- Euro Zone flash CPI estimate at 3.0% and likely removes the chance of an Oct rate cut

- China PBoC commented that its inflationary pressures wereeasing, but remained at 'high' levels.


Today's Economic News:

Day traders will be watching for Consumer Spending and Personal income this morning as clues to the NonFarm Payroll report next Friday.  Today is the last day of the quarter and the month, and most major money managers will be sitting on the sidelines.

We begin our day with news 830am Personal Income/Personal Spending, which will hopefully be out of expectations to give us some action early today.  We then go through the US Open at 930am and we have 945am Chicago PMI followed by 955am Consumer Sentiment, both very important news events.  The market reaction to these events around 10am this morning will tell us how the end of this morning session will go.  We expect Friday’s to be slow and sloppy after 11am, we will start looking for signs of slowdown after 1045am today, and we need to have a REALLY good reason to be trading after 11am due to low volume, low ATR, and the end of month ‘impulse’ trades.


Looking at the Charts:


Our first clue this morning comes from the dollar index, a strong up trend, which means our bias is to the SHORT SIDE this morning, until that changes.

Crude Oil futures are giving us some easy clues this morning:

-        Inside Day Transition

-        Price Wedge

-        Sideways Range

The inside day, sideways range and the price wedge both tell me to buy the lows, sell the highs, and avoid the middles.

So all three clues tell me to expect the fake-out breakouts.  As price falls I'm looking to buy first, then sell new lower lows with retracements.  As price rises I'm selling at resistance and then buying pullbacks with new higher highs.

If price falls I'm I'm going to buy the wedge lows and the PLOD as support.  If price breaks through that support we turn into an OUTSIDE DAY, which means we start selling retracements with new lower lows.

The price wedge reminds me to expect the fake-out break with lows below the PLOD, so that will be on my mind when we push below the PLOD.  If sellers are too strong we then will sell retracements, but we know what to be looking for.

I will then sell retracements down to the next major support levels at 80.50, 80.00 and 79.64.

If price rises I'm then moving towards the middle of the range, so don’t trade the middle, trade the highs or the lows of the wedge and the range.

I will sell the wedge highs, sell the resistance above the wedge highs at 83.00, 83.25, 83.30, 83.75, 84.00 and 84.50 above it.

Again, the price wedge reminds me to sell as price rises above the wedge, expecting to see the fake-out breakout. 

Gold Futures gives us three clues this morning:

-        Price Wedge

-        Inside Day

-        Bear Channel (short term)

This is the same personality traits we saw on crude oil, except for the channel.

As price falls I'm buying the wedge lows and the support below the wedge lows first, and then with this bear channel I will sell with new lower lows using a retracement.

We can assume the sellers will be in full control below 1611.3 so we’re looking to buy as price falls down to this level of support.

If price goes even lower, we then sell retracements, taking profit at the next major levels of support below, including the PLOD 16.02.2 and channel lows.

If price rises I'm buying the lows of the wedge, taking profit at the bear channel highs, and then selling the highs of the bear channel.

If price breaks through the bear it will go to the BMT so beware a sloppy market around the BMT.
I will sell resistance at 25.1, 26.6 and 29.2 and will avoid trading around the OPEN at 27.4


I’m always improving this prep, I appreciate your feedback, please post it here!

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