Wednesday, January 29, 2014

5 Clues from today's Dovish FOMC Report | SchoolOfTrade Nightly-Newsletter

“Take the first step in faith.  You don’t have to see the whole staircase, just take the first step – Dr. Martin Luther King Jr.

Reflections from Today:
·       Tuesday night Turkey, South Africa and India raised rates twice as much as expected, causing the equities to drop overnight over growth concerns
·       Final FOMC Day with Ben ‘Helicopter’ Bernanke.  February 1 sees Janet Yellen taking over the reins at the Fed
·       Today’s FOMC Announcement: Very optimistic outlook, Fed to maintain its current pace of tapering ($10B) extended into the future
·       FOMC:  Economy continues to expand, recent jobs report was weak, household spending is strong, unemployment rate is still too high.
·       FOMC:  Very Dovish, rates will stay low, tapering most likely to continue with consistency.
·       Gold reacted by moving higher over concerns that tapering will affect emerging markets
·       Crude Oil pushed higher to last week’s highs (+.30% @ 97.47)
·       Gold opened “gap-up” and never looked back (+.96% @ 1267.6)
·       Mini-Russell got crushed today, ending down (-1.95% @ 1120.3)
·       Jobless Claims & GDP on Thursday @ 8:30am EST
·       Gold contract rollover on Friday 31st
·       Chinese New Year on Friday 31st

Economic News for Tomorrow:

We have a lot more important news to trade with on Thursday morning, so we are expecting ANOTHER exciting trading session tomorrow with Jobless Claims and GDP scheduled at 8:30am EST.

Tomorrow’s GDP will tell us how strong the fourth quarter was in 2013, and this is one of the last reports we are going to see from 2013.    Jobless Claims will tell us how the employment situation is looking here in the US and later tomorrow we hear from Pending Home Sales which will give us a glimpse into the future of the housing market.

Thursday’s ALWAYS seem to be great trading sessions, and we will be ready to react to these news events starting early in the tomorrow’s session.

8:30am EST:        Jobless Claims & GDP
10:00am EST:     Pending Home Sales

Day trading plan for Tomorrow:

Crude Oil:

VIP Chart:
Crude Oil VIP Chart
Crude Oil looks very ‘balanced’ this evening on our VIP chart.  We can see a sideways 2-day relationship, a typical trading-range and a closing-print right in the middle of the range from today.  All of these clues tell us that tomorrow’s opening-print will be the key to know which direction we will be headed into Thursday’s session.

Anchor Chart:
Crude Oil Anchor Chart 1
Crude Oil is looking very BULLISH on the anchor chart this evening.  We can see price-action is currently above the key moving-averages and we have some easy buying opportunities below us at 97.04 and 96.63.

Crude Oil Anchor Chart 2
I am looking to buy Crude Oil this evening and into tomorrow using our simple wave-pattern long entry and will look for a profit-target at 98.78 overhead.

Crude Oil Anchor Chart 3
We can see the long term bullish price channel on the anchor chart is going to give us a nice profit-target up around the 100.00, which is possibly foreshadowing a move into the end of the week back up to the big-round-number at 100.00.


VIP Chart:
Gold VIP Chart

Gold is giving us some very mixed-signals on the VIP chart this evening, and we expect to see a LOT of volatility in tomorrow’s trading session because of today’s very bullish FOMC announcement.

First, we see a big GAP UP overnight, which told us the buyers were in clear control going from London to New York this morning.

Second, we can see that the buying wasn’t sustained for very long into the US session and the price-action pulled off the highs at 1269.3 and collapsed back to the PHOD at 1262.3.

Third, we see a very narrow trading-range from the US session today, suggesting that tomorrow has the potential to be very wide range and volatile.
The narrow trading-range, gap-up, and collapse back to the PHOD are telling us that tomorrow is likely going to be a volatile trading session that could go anywhere!

Anchor Chart:
Gold Anchor Chart 1
The Anchor chart of Gold paints a very bullish picture this evening.  We can see a recent higher-high with higher-lows on the way up.  We have all the key moving-averages below us right now so we have the green light to get LONG.

Gold Anchor Chart 2
My perfect entry will be to buy the 1265.1 or 1262.0 with a profit-target up at the highs at 1270.6 and then 1273.2.

Gold may take off higher tomorrow morning, so we have some profit-targets overhead that we will use for our long positions starting with 1276.2, 1277.5, 1283.3 and 1290.6.


VIP Chart:
Russell VIP Chart
The Mini-Russell, along with the other e-mini, got pushed lower today after the European equities began to selloff after India, Turkey and South Africa raised their interest rates in a surprise meeting of their Fed banks.

The VIP chart isn’t making it very easy on us going into tomorrow.  We have a sideways 2-day relationship, a very narrow trading-range, and a closing-print at the lows. 

This narrow trading-range tells us that SOMETHING big is coming soon, possibly tomorrow or Friday, but this selloff today shows us that ANYTHING is possible right now.

The closing-print at the lows of the range today leads us to believe there are more bears than bulls in the equities right now, but that’s the opposite of what we thought last night.  A wise trader at this point won’t try to predict tomorrow, we will simple come back in the morning and look at where the opening-bell leads us.

Anchor Chart:
Russell Anchor Chart 1
The anchor chart looks very bearish on the Mini-Russell; however, we don’t have a lot of wide-open-space to trade into at this time.

We can see a bearish trend, we are below the key moving-averages and we’re making new lower-lows and lower-highs.

The only problem we can see is this major trend-line as support below us around the 1114.5 level.  This trend-line goes all the way back to last November and it will likely provide some support to spoil the party for the sellers.

Russell Anchor Chart 2
My goal is to sell at resistance levels overhead so that I’m selling at a premium, so I will stay patient to sell the 1134.2 or 1142.1 and I will avoid selling the lows or directly into the support around 1114.5.

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