Wednesday, February 19, 2014

Extreme Volatility gives day traders opportunity | SchoolOfTrade Newsletter 02/19/14



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Reflections from Today:
·       Last Night: 
o   Mini-Russell BUY hits profit-target
o   Gold trades sideways, sit-on-hands
o   Crude Oil never pulls back, no trade
·       Today:
o   Crude Oil;  +133ticks (+0.33%) @ 102.95
o   Gold; +141ticks (-0.80%) @ 1311.6
o   Mini-Russell; +169ticks (-0.91%) @ 1148.1
o   Crude Oil & Gold react to FOMC Minutes
o   Equities testing all-time highs
·       News:
o   OPEX:  Wacky Wednesday today
o   Housing Starts: 16% drop M/M
o   FOMC Minutes:  Debate over Tapering
o   API# for Crude Oil:  -470k (1st draw in 5 weeks)
·       This Day In History
o   Feb 19th 1968:  First nationwide airing of Mr. Roger’s Neighborhood in the US
o   Feb 19th 1878:  Thomas Edison receives patent for “tin-foil talking phonograph”, known as the modern day record-player, was first to record sounds.
o   Feb 19th 2008:  Fidel Castro resigns as President of Cuba after 49 years;  his brother Raul succeeds him as president
·       Tomorrow:
o   China:  Manufacturing @ 8:45pm EST
o   Europe:  Manufacturing @ 3:00am EST
o   US:  Jobless Claims, Philly Fed Survey, Crude Oil Inventories


Economic News for Tomorrow:
News for Tomorrow
We have a very busy schedule of economic news going into OPEX-Friday end of this week so we are excited to see more trading opportunities starting this evening from China!



We begin this evening with manufacturing news from China at 8:45pm EST, followed by manufacturing news from Europe tomorrow morning starting at 3:00am EST.  Who said you can’t trade the overnight session?  You will have plenty of opportunities this evening and into tomorrow morning.

Tomorrow morning in the US session we have more Red-Star News on the schedule starting with 8:30am EST Jobless Claims, and then later in the morning we have the weekly Crude Oil Inventories report due out at 11:00am EST.

Remember, we are still inside of OPEX week, and tomorrow is Thursday so we must be aware that volume will be a bit inconsistent as traders prepare for OPEX on Friday.

In addition, if you are trading Crude Oil tomorrow you need to be patient to wait around 11:00am EST when they release the weekly Inventories.  I recommend our students to sit-on-hands 15-minutes before and after the news comes out, and to stay patient waiting for the new ‘direction’ after 11:00am EST.
·   
    8:45pm EST:             (CH) Manufacturing Index
·       3:00am EST:             (EUR) Manufacturing Index
·       8:30am EST:             Jobless Claims | Consumer Price Index
·       8:58am EST:             PMI Manufacturing Index
·       10:00am EST:           Philly Fed Survey
·       10:30am EST:           Natural Gas Inventories
·       11:00am EST:           Crude Oil Inventories

Day trading plan for Tomorrow:

Crude Oil:

VIP Chart:
Crude Oil traded higher for the 3rd day in a row today, ending the session right up at the highs near the big-round-number of 103.00.  One big clue we see on this chart is the volume, which is near the middle to lows of today’s range, suggesting that something surprised the markets late in the session today and pushed the price-action to the highs.

My plan for tomorrow is to look for buying opportunities above the 103.05, and selling opportunities below the 102.11.  If we can get short tomorrow morning our profit-target is below at the prior week high at 101.09.

Anchor Chart:
Crude Oil 34 Anchor
Crude Oil is pushing hard into major overhead resistance this evening on the 34-anchor chart.  We can see a sell-zone from 104.34 down to 101.81 and it appears that Crude Oil has pierced the lower end of the range and is trying to test the highs at 104.34 or 105.01 overhead.

Crude Oil 21-Anchor
The 21-anchor chart of Crude Oil shows us trading in over-bought territory, priced at a significant premium, which means we have to wait patiently for price to pullback off these highs if we are going to get a chance to buy this bullish market this evening or tomorrow.  I’m looking to buy the 101.22 if price-action can get back to the lows of this bullish price channel.

Crude Oil 13-Anchor
The 13-anchor chart of Crude Oil shows us the most important information this evening that we can use to make profit.  We can see this short-term bullish price channel along with 2 buy-zones at 102.63 and 102.24. 


My plan for Crude Oil this evening and tomorrow is to buy the 102.63 and 102.24 looking for a profit-target up at the highs around 103.28 and 103.59.  If we push below the 102.11 I am selling short down to 101.09.

Gold:

VIP Chart:
Gold VIP Chart
Gold traded inside the range from yesterday for a second day in a row today, suggesting that something BIG is likely on the horizon for Gold traders.  Today we had a very narrow trading-range and volume in the middle of the range, suggesting that a larger trading-range is likely to come before the end of the week.

My goal for trading Gold is to look for buying opportunities above the 1324.7 and selling opportunities below the 1317.0 with a profit-target down at the 1300.0 big-round-number below us.

Anchor Chart:
Gold 34-Anchor
It’s no wonder WHY Gold tumbled off the highs in today’s trading session…after running into major resistance at 1328.6 on the 34-anchor chart as well as hearing from the FOMC Meeting Minutes that they MAY stall the tapering in the US in the coming months if this economic data doesn't improve.

Gold 21-Anchor
The 21-anchor chart of Gold tells us a very important story.  We can see that price-action is well over-bought this evening at the highs of the bullish price channel and now starting to show signs of weakness to head lower this evening and into tomorrow.  If you look closely you can see that there is only 1 support level holding this price-action up at the highs.  If we can get below the 1309.0 area we should be able to get short very easily tomorrow.

Gold 13-Anchor
The 13-anchor chart of Gold provides us with the most useful information for day trading this evening.  We can see this short term bear price channel has developed, and we are making new lower-lows and lower-highs on the way off the recent highs at 1130.0. 

My plan for gold is to sell the resistance levels overhead at 1315.7, 1317.2, 1319.5 and 1320.9 with a profit-target below us at 1305.3, 1300.0, and 1292.9.

Mini-Russell:

VIP Chart:
Russell VIP Chart
The Mini-Russell went on a roller-coaster ride in today’s trading session, moving to the highs, and then collapsing back down to the lows.  We ALMOST made it back below the prior week’s highs at 1146.8 but the buyers were able to keep us above it.

My plan for the Mini-Russell tomorrow is to sell short below the 1145.7, and looking for buying opportunities above the 1162.6.  Inside the range I will buy the lows and sell the highs, avoiding the middle of the range.

Anchor Chart:
Russell 34-Anchor
The 34-anchor chart of the Mini-Russell shows us some very big clues this evening, including a price wedge on this slow anchor chart with resistance above around 1165.0 and major support below us around 1100.0.  This price wedge and resistance at 1159.2 suggests that we may be moving lower into the end of the week.

Russell 21-Anchor
The 21-anchor chart of the Mini-Russell paints a very bullish picture, however we can see the lows of this bullish price channel may be the last-resort for the buyers to keep this price-action at these highs.  If we break the lows of the price channel we still have to make it through the support at 1139.8 and then it’s FREE FALLING down to 1120.3.

Russell 13-Anchor
The 13-anchor chart of the Mini-Russell shows us some easy opportunities to sell the highs of this price wedge we found on the 34-anchor chart this evening.  We can see that price-action is stuck at the prior week’s high of 1148.9 and a support zone at 1147.3, but we have some great selling opportunities at the zones at 1152.2, 1153.7, 1155.8, and 1157.1.

My goal for the Mini-Russell is to sell short at 1152.2 or 1155.8 and use the levels below me as profit-targets around 1147.3, 1144.0, 1140.9 and 1135.8.

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