Tuesday, February 25, 2014

All-time Highs, Sideways Range & Muhammad Ali| SchoolOfTrade Newsletter 02/25/14

“Surround yourself with people who have something of value to share with you. Their impact will continue to have a significant effect on your life long after they have departed.”

Reflections from Today:
Markets Today:
o   Range-bound markets end the session with a bang
o   Crude Oil; 182ticks (-0.81%) @ 102.02
o   Gold; 126ticks (+0.31%) @ 1340.7
o   Mini-Russell; 104ticks (+0.16%) @ 1174.4
·       News Today:
o   Overnight:  Chinese Yuan biggest 1-day decline since 2008
o   Overnight:  UK Mortgage approvals highest level since 2007
o   Home Prices rise +0.8%, slower than last 2 mos.
§  Robert Schiller, “prices to rise early in 2014, stabilize end of 2014”
o   Consumer Confidence hits target @ 78.1, highest reading since 2008
o   Crude Oil API Inventories @ +820k (build)
·       This Day In History:
o   Feb 25, 1836:  Samuel Colt patents the first revolving barrel multi-shot firearm
o   Feb 25, 1901:  JP Morgan formed the ‘U.S. Steele Corporation’ which became the first billion-dollar corp on the planet
o   Feb 25, 1964: Cassius Clay (Muhammad Ali) becomes world Heavyweight Champion of the World for the first time, knowing out Sonny Liston   “Float like a butterfly, and sting like a bee”
·       News Tomorrow
o   4:30am EST: GDP (EUR)
o   10:00am EST: New Home Sales (US)
o   10:30am EST: Crude Oil Inventories (US)

o   Friday = End of the month 

Economic News for Tomorrow:
We have more important economic news on the schedule for Wednesday, so be ready for these news events to shake things up again tomorrow morning starting in Europe!

Remember, all the Crude Oil traders, tomorrow is Wednesday, so be sure to follow the procedures ahead of Inventories at 10:30am EST.  Be patient and wait for the news to be released and then about 10-minutes (10:40am EST tomorrow) look for the new trend and trade in that direction.
   4:30am EST:               GDP (GB)
·       10:00am EST:          New Home Sales (US)
·       10:30am EST:          Crude Oil Inventories (US)

Day trading plan for Tomorrow:

Crude Oil:

VIP Chart:
Crude Oil VIP Chart
Crude Oil traded in a range-bound market this morning after being pushed off the highs after news was released in China late Monday evening.

Today’s price-action was bearish day-to-day, however by the end of the session we saw a bullish closing-print up near the highs which was accompanied by bullish volume analysis near the highs as well.

My plan for trading Crude Oil tomorrow is to look for buying opportunities above the 101.96 with a profit-target at the 103.05 previous week highs, and selling opportunities below the 101.02 with a profit-target at the previous week lows at 100.37.

Anchor Chart:

Crude Oil 34 Anchor Chart
Crude Oil has pulled off the highs on our 34 anchor chart this evening, and we can see this large sell-zone from 104.34 down to 101.81 is providing all this resistance on Crude Oil this week.  If these buyers want to keep these moving higher they have a challenge ahead of them!

Crude Oil 21 Anchor Chart
We can see higher-lows and higher-highs on the 21 anchor chart this evening, however, we don’t have a clean line of sight to qualify getting LONG this evening until we push back to new highs.  I want to buy the zone at 101.29 – 100.77 and use the sell-zones overhead as profit-targets.

The 13 anchor chart gives us the most important clues this evening;  we have a bearish market-personality with a price channel pointing lower and some easy sell-zones overhead to look for selling opportunities later this evening and into tomorrow. 

Crude Oil 13 Anchor Chart
My plan for trading Crude Oil is to sell the zones at 102.24 and 102.93 looking for sellers to keep this party moving lower to the previous week’s lows around the 100.00 big-round-number.  If the buyers are too strong I will resort back to buying with the wave-pattern long above 103.17.


VIP Chart:

Gold VIP Chart
Gold got a big PUSH higher this morning after the news was released from China about its biggest drop in the Yuan since 2008.  We see a lot of BULLISH clues on this VIP chart this evening with the volume near the highs and the closing-print right at the highs.  Will this continue to be bullish tomorrow? 

My plan for trading Gold is to look for buying opportunities above the 1343.6, or selling opportunities below the 1337.7

Anchor Chart:

Gold 34 Anchor Chart
Gold is pushing higher this evening on the 34 anchor chart, running right over the resistance level at 1328.6 and heading to 1347.3 in a very short period of time.  The next stop above the 47.3 is the 63.0 and 68.6 is next range-high from late in 2013.

Gold 21 Anchor Chart
The 21 anchor chart of Gold shows us trending higher, near the lows of this longer-term bullish price channel.  We clearly want to buy along with this bullish trend, however, it would be best to wait for price-action to pullback to a location that is more ‘discounted’.  We never want to buy when price is at a ‘premium’ and that’s exactly where we are at this time so I recommend staying patient for a pullback.

Gold 13 Anchor Chart
The 13 anchor chart shows us the important information this evening.  We can see the short-term bullish price channel tells us to buy the lows for the high-percentage-trades this evening.  Furthermore, we see two (2) buy-zones below us at 1337.5 and 1333.9 begging us to wait for price-action to test these areas and get long from there.

My plan for trading Gold is to wait patiently to see if price-action can pullback and test the 1337.5 or 1333.9 and then look to get long from there.  I have a profit-target above us at 1344.8, and 1347.3.


VIP Chart:

Russell VIP Chart
The Mini-Russell had a MONSTER trading-range on Monday, and that usually (not always) gives us a narrower range in the following session.  As you can see, today was an excellent example of that.  All signs point to ‘neutral’ on this VIP chart this evening which means we want to be patient and look for clues tomorrow at the opening-bell.

My plan for trading Mini-Russell is to look for buying opportunities above the 1179.5 and also selling opportunities below the 1163.8.

Russell 34 Anchor Chart
Anchor Chart:

The Mini-Russell has returned back to its all-time highs from January this year which means we are clearly bullish on the 34 anchor chart, however, we know better than to buy at the highs…we want to buy at a discount!

Russell 21 Anchor Chart
The 21 anchor chart of Mini-Russell shows us trading just off the highs of a short-term bullish price channel, telling us to stay patient for the best trading opportunities soon to come at the LOWS of this price channel.  We always want to buy the LOWS of a bull price channel, so we are looking for buying opportunities down at the zones at 1160.3 and 1149.3.

Russell 13 Anchor Chart
The 13 anchor chart of the Mini-Russell makes it very difficult to be confident in buying right NOW… you can see there is a short-term sideways price wedge telling us that this bullish market-personality has changed to consolidation and we need to be patient.

My plan for trading the Mini-Russell is to stay patient overnight because the VIP chart didn’t give us any clues, and the short term is very sideways.  I will buy the 1169.6 and 1163.9 zones below us this evening because the long-term-trend is very bullish, but the best way to trade this is going to be to wait for tomorrow’s opening-bell and trade it from there.

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1 comment:

  1. JJ, I like the new format. Today seemed a bit more in depth and it makes it easier to refer back if needed.


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