Monday, January 27, 2014

Nightly Newsletter 01/27/14;

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

Reflections from Today:
·       Volume came back into the markets as sellers take profits
·       European Equities sold off, which carried into US trading
·       New Home Sales came out very weak; worst came from Northeastern US down -27% y/y.
·       Lots of News later this week
·       Durable Goods & Consumer Confidence tomorrow (Tuesday)
·       FOMC Day begins tomorrow, news is Wednesday 29th
·       Markets waiting to hear about “tapering” from the Fed
·       Chinese New Year is Friday (Horse)
·       Gold contract rollover on Friday 31st
·       Crude Oil went lower, sitting at support now (-1.25% @ 95.70)
·       Gold pushing lower, below all key support (-0.96% @ 1256.6)
·       Mini-Russell moves lower, below key support (-1.35% @ 1122.6)

Economic News for Tomorrow:
Monday we saw weak New Home Sales, which is putting pressure on the Fed ahead of Wednesday’s FOMC Announcement. 

Remember, the Fed was targeting the housing market with the stimulus packages over the last 3 years, and with today’s disappointing sales report for new homes we may see another delay on Wednesday for any threat of ‘tapering’. 

Over the last week of trading we have seen serious profit-taking ahead of this important meeting, which has pushed prices off the highs.  We are very interested to see what the Fed says on Wednesday, so come join us in the Live Trade Room for the release of the report!

Tomorrow we have more important news to trade with, and we hope to have another BIG MOVE like we saw today (Monday).

On Tuesday the 2-day FOMC Meeting begins, which won’t have much impact on the markets, except for the fact there may be less volume traded as the major players in the market will be trading very carefully ahead of this important announcement on Wednesday at 2:00pm EST.

We have a major Red-Star news event at 8:30am EST tomorrow from Durable Goods Order which is always a big mover for our favorite futures markets. 

Remember, this is a Red-Star news event so we will try to hold a ‘runner’ for a profit-target tomorrow after the news is released because there will be more volume and hopefully volatility to help us grab a big winning trade before the end of the morning tomorrow.

Later in the morning we have more news from the housing market with the Case Schiller Home Price Index (HPI).  The housing market took a big hit on Monday morning with the poor New Home Sales report so we will be watching this report at 9:00am EST very closely to see what’s happening in the housing market overall.

We have Consumer Confidence at 10:00am EST tomorrow, which is always a very important news report, and with the release of the FOMC Meeting Announcement only 48 hours away we KNOW this information is going to be used by the Fed to make its decision to taper in February.

The most important thing you want to keep in mind for tomorrow’s news is that we are going into the FOMC Meeting, which means there will be fewer people in the market and we will see less volume.  Low volume shouldn’t deter us from trading, but it WILL make for a little sloppier market-personality tomorrow morning.

In addition, tomorrow we have major Red-Star news starting at 8:30am EST, and whenever we have Red-Star news events on our calendar we try to get into trades that have a potential to ‘run’ and we stay patient and place our profit-targets a little bit further out in an attempt to make some easy money on a big move that often follows major news such as Durable Goods Order.

8:30am EST:       Durable Goods Order
9:00am EST:       Case-Schiller Home Price Index
10:00am EST:     Consumer Confidence

Day trading plan for Tomorrow:

Crude Oil:

VIP Chart:
Crude Oil VIP Chart
Crude Oil pushed lower today, down a total of 1.25% on the session, and our VIP chart is telling us a clear story ahead of tomorrow’s trading session.
We see a bearish 2-day relationship, a wide trading-range, and a closing-print on the lows of today’s range.

The wide range today tells us to look for a narrow, possibly consolidating market-personality going into tomorrow.

The bearish 2-day relationship as well as the bearish closing-print both tell us the sellers were in control the entire session today, and amazingly we never saw a short-covering rally’ into the closing-bell which is very typical for a big day moving lower and suggests the sellers are eager to keep selling into tomorrow.

I’m looking for an opening-print tomorrow morning below 95.21 to resume selling short on Crude Oil.

Anchor Chart:
Crude Oil is coming off recent highs last week and falling quickly back to new lower-lows on this anchor chart.

Crude Oil Anchor Chart 1
We can see the trend-line acting as resistance overhead and we have a bearish trend on this anchor chart which tells us we are going to sell short tonight and into tomorrow morning’s session in London and the US.

I have identified some key areas to look for selling opportunities this evening and tomorrow morning at 96.20 and 96.76.  I am going to avoid selling short directly into the support level at 95.25, but once we get below it we are given the green light to sell short with a profit-target down at 94.55.

Crude Oil Anchor Chart 2
As long as we keep getting new lower-lows I am going to sell short on Crude Oil and use the following support levels as my profit-targets for tomorrow.  I will use 94.55, 94.13, 94.83, 92.74 and 92.09.  One thing to remember is not to sell directly into any of these levels, wait for price to rise off the lows for you to sell it down again.


VIP Chart:
Gold VIP Chart
The VIP Chart of Gold makes it look like we are 48 hours away from the FOMC Meeting Announcement; we have to remember that FOMC directly correlates to Gold futures because this market is a shelter against a falling dollar.  Whatever happens on Wednesday after the release of the meeting announcement is going to have a big impact on Gold, and it APPEARS that traders on Gold have decided to play it safely today and into tomorrow on the VIP Chart. 

Our 3-day relationship is flat and we are in the middle of the range from 1270.4 down to 1248.7.

Our range was very narrow today, which usually tells us to expect a wide trading-range tomorrow, but I highly doubt that will happen with the FOMC announcement only 48 hours away.  I don’t want to predict, so I will be ready for ANYTHING tomorrow, but I won’t hold my breath LOL.

We are 2-sided on Gold going into Tuesday which means the SMART MONEY is going to buy support and sell resistance levels as price moves up and down (sideways) ahead of Wednesday’s report at 2:00pm EST.  We will be wise to look for buying opportunities at the 1248.7 and 1257.1 and selling opportunities at 1267.0 and 1270.4 overhead.

Anchor Chart:
Gold Anchor Chart 1
Gold is also moving lower this evening, which is odd because typically we see Gold and Crude Oil moving opposite to each other…not in this case…which gives us a clue that SOMETHING is coming on FOMC day Wednesday this week.

We are below the key moving-averages on the anchor chart and we have the green light to sell at a premium as long as we don’t sell directly into the support levels of 1250.3, 1246.0 or 1241.3.

Gold Anchor Chart 2
Our best selling opportunities will come if price moves HIGHER before it goes lower.  I am looking to sell short at the trend-line resistance around 1261.0, and then at the sell-zones at 1265.7 and 1273.5.

As soon as I can get into a short trade on Gold I am going to place my profit-targets at the levels below me at 1250.3, 1246.0, and 1241.3.


VIP Chart:
Mini-Russell VIP Chart
The Mini-Russell and other e-mini’s have been moving lower today on what we assume is profit-taking ahead of Wednesday’s important FOMC Meeting Announcement.

Our VIP chart shows us a very bearish outlook for the Mini-Russell heading into tomorrow, but remember we may see some sideways and consolidation ahead of FOMC, but we will be ready for anything just like always.

The 4-day relationship is very bearish on this chart, and the closing-print near the lows tells us that the sellers never gave up control today throughout the entire session.

Tomorrow I am looking to start selling short with an opening-print below 1117.5 with a profit-target below me at 1105.3 and 1100.0 big-round-number.

If we get an opening-print tomorrow morning above the 1144.5 highs from Monday I will buy pullbacks using our wave-pattern long with a profit-target up at 1163.3 highs from Friday and 1180.1 previous week’s highs.

Anchor Chart:
Mini-Russell Anchor Chart 1
The anchor chart of the Mini-Russell gives us more bearish clues ahead of tomorrow’s trading session. 

We are below all the key moving-averages and have an easy-to-see bearish trend on the anchor chart.
We have a support level below us at 1121.4 and 1119.6 which we will use as profit-targets for the selling opportunities we see tonight and into tomorrow.

Mini-Russell Anchor Chart 2
I always want to sell at a PREMIUM, and right now the Mini-Russell is trading at a ‘discount’ being at its lows of the most recent retracement.  I would like to see the Mini-Russell move higher back into resistance overhead so I can sell it short with a bigger profit-target and some resistance to protect the trade.

We always want to sell at a premium and buy at a discount, so wait for the Mini-Russell to retrace off these lows, and when we head lower again then I am in a perfect spot to get short!

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