Wednesday, February 22, 2012

Day Trading Strategies for Dollar Index , Euro, Crude, Russell and Gold futures

The James' Report:  Day Trading Strategies for Professional Traders

What does heaven look like for a day trader?  Is it a life filled with ONLY winning trades?  If heaven is filled with nothing but profit targets, wont that get old after a while?  How do you get excited to tell your spouse that you made all winning trades today….for the 365th day in a row?   I think heaven for a day trader is a ‘state of mind’ and that state is conditioned from adversity.  Heaven sounds like a place close to earth, sounds like something we can achieve through hard work, and trading a plan each day.  Imagine…what does YOUR heaven consist of?

***Notes/Observations from around the world***

- China's HSBC Feb manufacturing flash PMI Manufacturing hits 4 mo high

- President Obama's corporate tax proposal could involve cutting the top corporate tax rate to 28% from the current avg rate of about 32%

- USD/JPY pair move above the 80 level for 6-month highs; Nikkei hits 6-month highs

- German and Euro zone PMI data softer than expectations

- BOE members spilt on the amount of QE needed to guide the economy

- European shares traded flat to negative territory even after Dow crossed 13000 since Nay 2008. The gains were unsustained, however, and fears over growth outlook seeped back into the market and at the open of the European trading today. European bourses remain unimpressed with the Greek deal as traders focus on the long-term prospects and debt sustainability for the bailed nation. Eurozone PMI also came lower than expected while soaring oil prices due to crisis in Iran continue to dampen risk appetite.


- Iran Dep Oil Min: Will not sell oil to any company that gives oil to Britain or France

- Iran's Supreme Khamenei stated that the country's nuclear program would not deviate from current course despite international pressure and sanctions

- Japan MoF official commented that he was not uncomfortable with JPY's recent weakness and would continue to watch developments and act appropriately. He added that if the JPY were to rise, then it would pose downside risks to the Japanese economy.

speculation for rebound continues to remain strong

-India Prime Minister's Economic Advisory Council (PMEAC) lowered its FY12 GDP view to 7.1% from 8.2% prior view (Note: second cut of FY growth outlook)

 India PM Econ Advisor Rangarajan commented afterwards likely overshoot in fiscal deficit over the budgeted 4.6% of GDP was a matter of concern and the government must lay out a roadmap for fiscal consolidation. India needed to bring down current account deficit to range 2.0-2.5% of GDP. He also noted that RBI needed to check excessive INR currency appreciation and that continued fiscal side pressure would limit central bank action (RBI).

- Australia Foreign Min Rudd resigned ahead of PM Gillard's planned Cabinet reshuffle. The PM had planned to remove Rudd as speculation built that he would make a bid for her position before the next elections

- Bank of England (BOE) Minutes   saw another unanimous vote to keep interest rates steady at 0.50% but was split 7-2 to increase the Asset Purchase Target by £50B to £325B. BOE members Miles and Posen sought a higher increase of the APT by £75B and cted that the extent of deleveraging would likely to be required and both saw considerable spare capacity. The MPC Majority feared larger dose of QE might send message that economy was weaker than it was. The majority noted that growth was volatile in the near term due to one-off factors but should strengthen gradually thereafter

- German Fin Min Schaeuble commented that he was not concerned about Greece 2012 Deficit provisions and remained confident that German Parliament would approve second bailout package for Greece later this month (Reminder: Greece FY12 budget deficit target was revised higher to 6.7% of GDP v 5.4% prior)

- Netherlands Fin Min de Jager reiterates doubts on Greece ability to implement measures in its second bailout program. The minister also reiterated that it was in favor of merging the ESM and EFSF funds to reach €750B

- Ireland issued statement on planned asset sales and identified €3B in state assets for sale under bailout

- German BDB Private Bank Federation Present Economic Forecasts: Forecasts 2012 GDP growth at 0.5% compared to 0.3% prior year


The BOE minutes sent the GBP currency lower as the MPC was split on the amount of increase in the Asset Purchase Target. Two member sought more than the agreed upon amount of £50B stimulus. The GBP/USD fell from 1.5775 to test 1.5700 level in the aftermath of the release. The EUR/GBP cross hit fresh 2012 highs above 0.8430.

Political/ In the Papers:

- The FT reported that the Greek government has been given nine days to meet certain conditions. Its international lenders demanded the government complete a checklist of reforms before the end of February in order to receive the €130B bailout of aid. The list includes the preparation of asset sales and plans to tackle tax evasion.

- Spain will ask EU Commission for a larger 2012 budget deficit of just over 5% instead of the prior targeted figure of 4.4%. According to the local press, Spain is estimating its 2011 budget deficit at 8% of GDP. It is expected that the government will present a final 2011 budget figure at the end of March.

- The Telegraph's Ambrose Evans-Pritchard argued that the new rescue package for Greece is only a short-term solution, reiterating that austerity measures could eventually worsen the country's economic and political crisis. The troika's economic assumptions for Greece could be too optimistic. In a worst case scenario for 2012, the troika believes the Greek economy could contract by 4.8%, while the Greek Labour Institute estimates a contraction of 7% contraction.


Today's Economic News:

Our day trading strategies today will depend on the news, and this morning we have another day without much US-based news to worry about, and a mess of news chatter coming out of Europe and the middle east.  On Tuesday supply concerns in Iran pushed prices above 106.00 and the supposedly agreed-on bailout for Greece will continue to take center stage without the news in the US to take the spotlight.

This morning we begin the day with the first major news event being the US markets opening at 930am EST so that will be the first time this morning when the big money can slip in their orders without moving the market.

10:00am EST this morning we have Existing Home Sales, which really isnt that important but since it’s the only news we will watch it. Remember, day traders don’t trust these housing reports because of manipulated data from the regulatory agencies and the inflated sales from deep discounts and tax incentives.  Needless to say, this will be a small blip on the radar for more traders today, however, since it is the only news it is something we will be watching.  Notice on the chart below that the overall trend has been down, however the past 2 news releases have been very strong, which is why traders will be looking for clues from today’s news on existing home sales regarding the continued efforts of the recovery here in the US.

Existing Home Sales

After we make it through the 10am EST news have a big variable and we will be looking for clues regarding market personality to tell us when the day comes to a close before lunch at 1100am and the European close at 1130am EST.  We may see great opportunities all the way through 1130am EST today but we may not…we will be watching and LISTENING.


The markets I'm following this morning are:

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