Wednesday, January 15, 2014

Markets Rally on Bullish Sentiment | Day Trading Newsletter 01/15/14; SchoolOfTrade.com



“Do not judge each day by the harvest you reap, but rather by the seeds you have sewn.”


Reflections from Today:
·       Markets Rally on confident consumers, low Crude Oil inventories
·       Crude Oil and Russell very bullish all session today
·       Crude Oil Inventories came out much lower, and with higher demand, causing Crude Oil to move higher; we bought pullbacks all session.
·       Crude Oil closes just shy of 95.00 a barrel, up almost $2.00 today
·       Mini-Russell Gapped UP at the opening-bell, we bought pullbacks all session
·       (US) The House approved a new $1.1 Trillion Spending Bill, keeps the US Government open until September 2014.
·       Beige Book Report says the economy is improving, along with real estate, the job market, and inflation is not a concern so rates are expected to be kept low for all of 2014.

Economic News for Tomorrow:
We have another exciting day filled with news on Thursday morning, so we need to be prepared.

First, we have Red-Star news at 8:30am EST from Jobless Claims and Consumer Price Index.  These two news events are expected to get the price-action moving very early in the trading session.

Economic News Tomorrow
Later in the session we have another Red-Star news event at 10:00am EST from the Philly Fed Survey, which is a manufacturing report so we will certainly be paying close attention to Crude Oil at that time.

Before we finish the morning trading session tomorrow in the US we will hear from Ben ‘Helicopter’ Bernanke on the topic of the challenges facing our central bank.  Remember, Ben Bernanke is on his way OUT of office with Janet Yellen eyeing his seat at the head of the table in February, so this is going to be one of the last times we hear from “Helicopter-Ben” as our Fed Chairman.


Day trading plan for Tomorrow:

Crude Oil:

VIP Chart:
Crude Oil VIP
Crude Oil was a rocket-ship to the moon in today’s trading session.  Just like we had projected in last night’s newsletter, an opening-print above the 93.00 PHOD was a sure sign that the bulls were still in control.  We were bullish all day today on Crude Oil but we have some big clues for tomorrow.

First, this wide range today means tomorrow is likely to be a range-bound market for the morning session.

Second, the closing-print at the highs of the day tells us that the buyers were in control until the very last moment of trading today.  If we open tomorrow above the HOD from today @ 94.64 we are going to be bullish on the session once again.

Third, look at the previous week’s HIGH at 94.22 and the fact that we tried to stay above it but did NOT.  This leave the window WIDE OPEN for this rally to be reversed and see price-action come right back down to where we began.

We have a very solid plan for tomorrow.  An opening-bell above the 94.64 and we’re bullish until it fails back below that level.  If we open inside today’s range (92.73 up to 94.64) then we will be 2-sided trading and we will buy-the-lows at support and sell-the-highs at resistance.  If we open below the 92.73 we are bearish and will remain bearish until we pop back above 92.73.


Anchor Chart:
Crude Oil Anchor
The anchor chart of Crude Oil shows us a very interesting picture this evening.  It’s easy to see the bullish market-sentiment pushed these price higher today, but we’re now seeing a short term reversal and the move back down is likely to be a ‘bumpy ride’ as it moves through the moving-averages acting as support.

We have three scenarios to consider for tonight and tomorrow.  First, if price moves sideways we need to sit-on-hands until we get some new lower-lows or higher-highs. 

Second, if price moves higher we will buy pullbacks the same way we made our money in today’s session.

Third, if price-action moves lower it will likely be a very bumpy ride because we can see there are many support levels waiting for us.  We will sell short if we have enough room to drop ahead of the support levels listed at 94.00, 93.69, 93.14 and 93.04. 

If we decide to get short this evening or tomorrow morning we will use the support levels below us as targets, just don’t forget about those 3 moving-averages that are BELOW us, and you can see there is a wide range between each one so there is potential for the price-action to fall but it will likely bounce off these on the way down to our ultimate short-selling profit-target at 93.04 and 92.12.


Gold:

VIP Chart:
Gold VIP
We nailed Gold for today as well, and the VIP chart shows you exactly what happened.  Do you remember how we said an opening-print below 1241.1 today would result in lower prices on the session?  Look closely and you can see we opened below the PLOD and price-action moved lower for the majority of the session today, giving you easy trading opportunities short-selling today.

For tomorrow we can see that today’s trading-range was very narrow, with a closing-print in the middle of today’s range, and staying completely below the range from Tuesday.

We can assume that this narrow trading-range will likely result in a much WIDER range on Thursday, so keep an eye on the range high at 1254.9 as a profit-target if we get back up above the 1241.1. 

We are BULLISH with an opening-print above 1241.8 tomorrow and bearish if we open the session below 1233.5.  If we go short we want to use 126.6 and 1222.8 as profit-targets for sellers.  If we get long we are using the previous week high at 1248.5 and Tuesday highs at 1254.9 as our profit-targets.


Anchor Chart:
Gold Anchor 1
The anchor chart of Gold is FILLED with important clues for tomorrow’s trading session, starting with the recent shift from bearish to sideways and now bullish going into the Asian trading session at 7pm EST.

First, we can see a bullish price channel with a green ‘cloud’ telling us that the buyers have taken control over this price-action.  We can see the moving-averages are BELOW the current price so we have the green light to buy right now using our wave-pattern long.
Gold Anchor 2

We have plenty of profit-targets above us for buying opportunities this evening starting with 1243.2, 1244.2, 1245.2 and 1246.7.  Please notice the BIG REVERSAL location is going to be 1245.2.

If price keeps moving higher we will also want to use the previous week’s high at 1248.5 as another profit-target and then look for a price-reversal at that level as the rest of the buyers take their profit.

Gold Anchor 3
What happens if price falls lower?  If we see this price-action move lower before it goes higher we are looking for buying opportunities at 1238.2 and then again at 1236.1.  If we end up moving below the 1236.1 we will then STOP buying and change to bearish market-sentiment so we will start selling below 1236.1 and use the double-top support at 1232.3 as a profit-target.


Mini-Russell:

VIP Chart:
The VIP Chart of the Mini-Russell confirms that we NAILED our call on last night’s newsletter.  If you recall, we had predicted a very bullish run if the opening-bell this morning was above the 1161.7 at 9:30am EST, and it certainly was.

Russell VIP
I think we have some big clues on this VIP chart that suggest we may be in for ANOTHER big move on Thursday.

First, the narrow trading-range tells us tomorrow is likely to be a much wider trading-range.

Second, the closing-print this evening at the highs of today’s range tells us the buyers had control until the very last trade of the session today.  The million-dollar question is “will they have control tomorrow?”

Third clue we see is the prior week’s high.  We opened and stayed above the weekly highs today, which tells me if we re-open tomorrow above the 1161.6 we are going to continue higher in this bullish market-personality on the Mini-Russell.

One thing we MUST be ready for tomorrow is the potential for a profit-taking collapse back under the weekly highs and headed back into this long-term sideways-trading-
range from 1161.7 down to 1138.6.

Watch closely tomorrow morning to see where we open the session.  If we open above the 1169.5 we are buying with the wave-pattern long because we are very bullish.
If we open tomorrow inside today’s range from 1169.5 down to 1161.7 we will assume the buyers and sellers are in balance, which means we will buy the lows and sell the highs of the range until something breaks the price-action higher or lower.
If we open tomorrow morning below today’s low of 1161.7 we will have seen a massive failure of the buyers and the price-action is very likely to trade lower all the way back down to Tuesday’s lows at 1148.1 or even as low as the previous week’s low at 1143.2 or the PLOD at 1138.6. 


This narrow trading-range tells us that we may see some big fireworks on the Mini-Russell in Thursday’s trading session, while at the same time we are at new highs and we may keep crankin’ higher, we will have to wait and see!

Anchor Chart:

Russell Anchor 1
Where does the Mini-Russell want to go next?  The anchor chart shows us that we have the green light to buy pullbacks with our wave-pattern long because we have all the moving-averages below us as support and wide open space to move higher up to 1171.5 for a profit-target.

We can see a bullish price channel on this anchor chart, and we are above the previous week’s highs of 1162.2.

With this bullish market-personality we have a few scenarios to consider going into tomorrow.

Russell Anchor 2
First, if we trade sideways here we will sit-on-hands and wait for something to get this price-action making new higher-highs or lower-lows.
Second, if we go higher we will immediately start buying using our very effective ‘wave-pattern long’ to enter on pullbacks and use the resistance targets overhead at 1171.5, 1173.0, 1173.9 and so forth.


Russell Anchor 3
Third, if price-action moves lower before it moves higher we have a buy-zone at 1166.7 and again at 1165.0.  Please be aware, if we get below the 1165.0 buy-zone we are now turned bearish and will begin selling short with an easy profit-target at the previous week’s high at 1162.2 and then another target will be at the low of the day from today at 1159.3

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