Wednesday, January 22, 2014

Day Trading Newsletter 01/22/14; SchoolOfTrade.com



“What we can or cannot do; what we consider possible or impossible; is rarely a function of our true capability. It is more likely a function of our beliefs about who we are.”

Reflections from Today:
·       Crude Oil pushed higher +177ticks (+1.60% @ 96.75)
·       Gold drops again -80 ticks (-.30%) @ 1236.3)
·       Mini-Russell went higher +109 ticks (+.60% @ 1179.0)
·       No major news + Winter Storm = Low Volume today (6% below avg)
·       Low volume made us stay patient
·       News returns to the market Thursday (see below)
·       API Crude Oil Inventories +4.86M (first build in 4 weeks)
·       Earning Season continued; IBM, AMD, TXN, GD, UTX
·       Politicians continue to push raising interest rates into 2015

Economic News for Tomorrow:

Tomorrow we will finally get some economic news that we can use for high-percentage-trades and not a moment too late!  This week has been missing the major news to get the price-action moving well for us, so we are excited for a day filled with Red-Star news events on Thursday.

8:30am EST         Jobless Claims
8:58am EST         PMI Manufacturing Index
10:00am EST      Existing Home Sales
11:00am EST      Crude Oil Inventories*



* On Wednesday evening we saw the API Report was +4.86M barrels, which is the first increase of inventories in over 4 weeks*

Day trading plan for Tomorrow:

Crude Oil:

VIP Chart:
Crude Oil VIP Chart
Crude Oil showed just how bullish the market-personality really is this morning trading much higher by the closing-bell that the initial volume in the market suggested.
We can see a BULLISH 2-day relationship, a wide trading-range from today, and a BULLISH closing-print near the highs.

This information tells me that tomorrow we expect to see a narrower trading-range, while it appears the bulls will continue to be in control over this price-action.
The most important clue tomorrow will be the opening-print; if we open above 96.89 we are bullish on the day.  If we open inside the range from Wednesday we are 2-sided trading, and if we open below the 95.64 we are bearish and selling short tomorrow morning.

Anchor Chart:
Crude Oil Anchor Chart
Crude Oil pushed much higher this morning and our anchor chart shows us testing the major resistance level overhead at 96.81.

We are going to be patient to wait and see where the traders want to take it from here because I can easily see it moving both ways with ease.

First, we see a bullish price channel, a green ‘cloud’ with higher-highs and higher-lows which ALL suggest this market is in the hands of the buyers.

We have a green light to start buying with a wave-pattern long as soon as we see another higher-high, so our members should be looking for a wave-pattern long this evening and into tomorrow morning.

Second, we are likely to move LOWER before we move HIGHER this evening and overnight into tomorrow, so we have identified some key support levels we will be watching closely for buying opportunities this evening and tomorrow morning.

If price-action never moves lower and we keep pushing to new highs overnight we have the GREEN LIGHT to keep buying pullbacks and using the 100.00 big-round-number as an easy profit-target for the buy-side tonight and tomorrow.

Gold:

VIP Chart:
Gold VIP Chart
Gold looks exhausted this evening as it traded sideways in most of today’s trading session ahead of tomorrow’s Red-Star news events starting early in the session.

We can see a bearish 2-day relationship, along with a narrow trading-range and a bearish closing-print at the end of the session today.  All of these signs tell us to keep looking for selling opportunities this evening and into tomorrow morning.

The big clue I see on the VIP chart this evening is this very narrow trading-range, which often times is a clue that tomorrow will be a VERY WIDE RANGE type of day.  If the sellers continue to push lower, we may be in for a very wild ride tomorrow on Gold as the market-sentiment continues to scream ‘bears are in control’.

Anchor Chart:
Gold Anchor Chart 1
The anchor chart is NOT the place to look if you’re trying to find reasons to BUY Gold right now, we see another set of big clues telling us to look for selling opportunities this evening and into tomorrow.

We have a triple-threat right now, long and short term trends are down, and we are BELOW the important moving-averages that we watch on our anchor charts.

All of these signs tell us we have the GREEN LIGHT to begin selling short right now on Gold and using the profit-targets below us at 34.9, 32.6, 30.1 and then a big jump down to a juicy profit-target at 1221.7.

Gold Anchor Chart 2
I think there is a decent shot that we tumble all the way down to 1221.7 on Thursday/Friday this week, especially since we have some important Red-Star news events on the calendar for Thursday.


Mini-Russell:

VIP Chart:
Mini-Russell VIP Chart
The equity indexes (emini’s) are laughing all the way to new higher-highs while Gold is getting crushed this week.

We can see big clues from this VIP chart; bullish 2-day relationship, and a bullish closing-print tell us that not only have we been bullish over this last 2 days of the week, but we are closing the session with the buyers in complete control over this price-action. 

The biggest clue we need next is the opening-bell tomorrow morning at 930am EST.  If we open above the 80.1 we are bullish and looking for buying opportunities.  If we open below the 71.3 we are bearish and ready to sell short down to the PLOD at 1164.0.  If we open INSIDE the range from Wednesday we will assume this price-action is ‘balanced’ so we will buy the lows at 1171.3 and sell the highs at 1180.1 looking for clues of a successful breakout and then we can trade in the direction of the breakout.

Anchor Chart:
The anchor chart on the Mini-Russell has nothing but bullish clues for us this evening.
Mini-Russell Anchor Chart
We have a triple-threat moving higher; long term, short term and the cloud are ALL bullish, and we’re above the moving-averages on this anchor chart.


We have GREEN LIGHT to begin buying pullbacks on the Mini-Russell this evening and into tomorrow.  I would recommend we try to wait for price to pull off the resistance of 1180.3 before we start buying.  We will want to see a new higher-high above the 80.3 or a pullback down to the support zone at 1175.7 where we will have an excellent opportunity to get long tomorrow morning.

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