Thursday, February 20, 2014

Bad News can’t stop Equities ahead of OPEX | SchoolOfTrade Newsletter 02/20/14

“Formal education will make you a living; self-education will make you a fortune.”

Reflections from Today:
·       Market’s Today:
o   OPEX in full effect! (sloppy)
o   Crude Oil;  76-ticks (-0.03%) @ 102.87
o   Gold; 182-ticks (+0.93%) @ 1323.0
o   Mini-Russell; 205-ticks (+0.96%) @ 1158.7
·       News Today:
o   China & EUR Manufacturing; LOWER
o   Jobless Claims; FLAT (336k)
o   Philly Fed Survey; LOWER (-6.3)
o   Crude Oil Inventories; FLAT
·       This Day In History:
o   Feb 20, 1792; George Washington establishes the first Post Office
o   Feb 20, 1809; Supreme Court rules that Fed Govt has more power than individual states
o   Feb 20, 1852; first train runs from New York to Chicago, opening the West of the United States
o   Feb 20, 1962; John Glenn becomes first American to orbit Earth
o   Feb 20, 1998; American, Tara Lipinski wins the Olympic figure skating gold medal as youngest person ever (Age 15)
·       News Tomorrow
o   OPEX Friday ALL Day
o   EUR:  Retail Sales @ 4:00am EST
o   CAD:  Retail Sales @ 830am EST (Crude Oil)
o   US: Existing Home Sales @ 10am EST

Economic News for Tomorrow:
Friday's News
Tomorrow brings the end of OPEX, the third week of the month, with options expiring at the end of the day on Friday.  Traders from around the world will be making any final adjustments to their portfolios early tomorrow morning, and we expect the volume to be light tomorrow until the end of the morning when we should see some volatility kick-up as ‘desperation trades’ hit the tape before end of the session.

The news in the US session is very light tomorrow, usually we don’t have any news at all on OPEX-Friday, but tomorrow we do have news in the US from Existing Home Sales at 10:00am EST.

The big news on the schedule comes from Europe and Canada early tomorrow morning.  First, we have Consumer Price & Retail Sales numbers being released in Europe starting at 4:00am EST. 

Second, we have Retail Sales reported from Canada tomorrow at 8:30am EST which will likely kick-up some volatility on commodities such as Crude Oil, natural gas, etc.

·       4:00am EST:             Consumer Price Index (EUR)
·       4:30am EST:             Retail Sales (EUR)
·       8:30am EST:             Retail Sales (CAD)
·       10:00am EST:          Existing Home Sales (US)
·       11:00am EST:          Weekend Begins! (US)

Day trading plan for Tomorrow:

Crude Oil:

VIP Chart:
Crude Oil VIP Chart
We’re trading sideways on Crude Oil this evening with our second day in a row of trading inside the previous day’s range.  This type of market-personality cannot continue for much longer… other markets are moving like wildfire… so what’s the hold-up on Crude Oil?

My plan for Friday is to look for buying opportunities above the 103.05, along with selling opportunities below the 102.11.  If we get short below 102.11 I’m looking for a profit-target down at the prior week’s lows at 101.09.

Anchor Chart:
Crude Oil 34 Anchor Chart
We can see Crude Oil pushing into some major resistance around 101.81 up to 104.34, which explains why price-action has been stuck just below the 103.00 big-round-number this week.  This 34-anchor chart shows us well-overbought and running into resistance which suggests that price will move LOWER before it moves HIGHER.

Crude Oil 21 Anchor Chart
The 21-anchor chart of Crude Oil shows us clearly very bullish.  We can see the bull price channel, higher-highs and higher-lows, along with a green ‘cloud’ above all the key moving-averages.  All of these clues tell me to look for buying opportunities this evening and tomorrow…HOWEVER…I don’t want to buy at a premium so I will be looking for buying opportunities after Crude Oil pulls back. 

I would LOVE to buy the support zone at 101.76 on the way up to a profit-target at 103.60.

The 13-anchor chart of Crude Oil shows us the most important details this evening and into tomorrow.  We can see 2 bullish price channels on this chart, along with a key buy-zone down around 102.24-102.11. 

Crude Oil 13 Anchor Chart
I want to buy the lows of this price channel around 102.60, and will definitely look for buying opportunities at the 102.24 if we can be so lucky.  I have profit-targets overhead at 103.09, 103.27, 103.62, and 103.98 and all the way up at 104.45.  If price-action moves below 102.11 I will then look to sell short.


VIP Chart:
Gold VIP Chart
Gold has been fun to trade this week, even if this price-action doesn’t make much sense to us right now…who cares…making money doesn’t always have to make sense!  Today we had a gap-down at the opening-bell but the US traders scooped it up and pushed it right back to where the day ended on the prior day, suggesting that we may have a bullish move back up to 1324.7 on Friday.

I am looking for buying opportunities above the 1318.0 with a profit-target at 1324.7, and selling opportunities below the 1311.1 with a profit-target down at 1300.9.

Anchor Chart:
Gold 34 Anchor Chart
Gold is trying to push itself through a major resistance zone overhead right now on the 34-anchor chart.  We can see resistance up at 1328.6 and 1347.3 is standing in our way if the buyers want to keep pushing higher.  We can also see some excellent buying opportunities down at 1285.3 which is not on a buy-zone but also a key trend-line support level.

Gold 21 Anchor Chart
The 21-anchor chart of Gold shows us more bullish clues this evening.  We can see the long-term bullish price channel, but more importantly we can see the buyers have run this price-action all the way up to the HIGHS and the sellers have started to grab control after we assume people starting taking profit at these highs. 

Look closely and you can see a key buy-zone down at 1285.2 which would be a great place to load-up on some gold if we can get down there in the next 24 hours.

Gold 13 Anchor Chart
Gold throws us a “curve-ball” on the 13-anchor chart this evening.  First, we can see the long term bearish price channel and we are trading at the highs this evening which is a very strong resistance location on this chart.  Second, we can see today’s price-action pushed Gold higher above the key moving-averages and giving us higher-highs and higher-lows.  These are conflicting clues for this evening so we need to be careful.

My goal is to sell these highs of the bear price channel in the short-term, taking profit at 1318.3 and 1307.1.  In addition, I am going to look for buying opportunities at the 1318.3 and 1316.2 levels as price goes lower and I will use the levels of 1325.1 and 1327.0 as profit-targets overhead.


VIP Chart:
Russell VIP Chart
The Mini-Russell has been trading inside the same trading-range all week since we started after the holiday on Monday.  This week has been incredible for day trading because you can see that price-action went from top to bottom, then back up to the top again over the last 3 sessions, giving us ample amount of trading opportunities during our Live Trade Room.

My goal is to look for buying opportunities above the 1162.6, along with selling opportunities below the 1145.1 with a profit-target short down at 1119.2 lows from last Friday.

Anchor Chart:
Russell 34 Anchor Chart
The 34-anchor chart of the Mini-Russell shows us trying to break through this resistance for a second time this week.  We have a major sell-zone above us at 1159.2 up to 1169.5 along with a resistance trend-line.  I want to be a seller at this trend-line and sell-zone so I will be watching closely to see how tomorrow’s opening-bell looks and considering selling short from there.

Russell 21 Anchor Chart
The 21-anchor chart shows us trading higher inside a long-term bullish price channel so we want to use the LOWS of this price channel for buying opportunities this evening and into tomorrow.  Look closely and you can see that there is a major resistance level above at 1162.5 and we just tested it and pulled off the resistance. 

I want to buy the Mini-Russell if we can get down to the 1151.4 buy-zone this evening or tomorrow.

Russell  13 Anchor Chart
The 13-anchor chart of the Mini-Russell shows us the most useful information for day trading this evening and into tomorrow morning.  First, the bullish price channel tells us to look for buying opportunities near the lows of the price channel.  Second, we can easily see that price-action is “overbought” or “priced at a premium” right now so we want to wait for price to move lower into a position where we can buy at a discount.

I want to buy when the Mini-Russell comes off these highs…perfect location for buying opportunities will be at the lows of this price channel around the 1153.4 area.

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