Tuesday, February 4, 2014

Range-Bound Markets set-up for big moves Wednesday |Newsletter 02/04/14; SchoolOfTrade.com

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“You are now at a crossroads. This is your opportunity to make the most important decision you will ever make. Forget your past. Who are you now? Who have you decided you really are now? Don’t think about who you have been. Who are you now? Who have you decided to become? Make this decision consciously. Make it carefully. Make it powerfully.”

Reflections from Today:
·       As expected, markets trade ‘inside’ Monday’s range
·       Equities seen as a ‘bargain’ and now find support
·       Factory Orders came in “less-weak-than expected”
·       Crude Oil ends the day flat (-0.03% @ 97.73)
·       Gold ends the day flat (-0.05% @ 1253.5)
·       Mini-Russell ends the day flat (0.00% @ 1095.6)
·       Copper Futures show all-time biggest drop in 2014 on soft demand
·       Politicians in Washington bargaining over the ‘debt-ceiling’ with Keystone Pipeline & Affordable Care Act…does anyone care?
·       Feb 4, 1789 George Washington elected as our first President, John Adams as Vice President
·       Tomorrow we shift focus to Friday’s Non-Farm Payroll Report
·       Crude Oil Inventories tomorrow @ 10:30am EST

Economic News for Tomorrow:

Wednesdays are all about Crude Oil Futures and tomorrow we are watching Crude Oil closely ahead of the Inventory news at 10:30am EST.

News Worksheet
At 4:30pm EST on Tuesday evening we hear from the API report, which shows a 3rd consecutive weekly build in inventories, which suggests lower prices on Wednesday due to higher inventories.  We won’t predict, but this is a very important clue going into Wednesday’s trading session for Crude Oil traders.

Early tomorrow we see the ADP Employment report, which is never that important, but it WILL give us some clues heading into Friday’s Non-Farm Payroll report.

Later in the session we hear from ISM Non-Manufacturing Index has been falling the last few months because NEW ORDERS have been dropping due to bad weather and poor economic news.  We are anxious to see if this downward trend will continue tomorrow.

8:15am EST              ADP Employment Report
10:00am EST            ISM Non-Manufacturing Report
10:30am EST            Crude Oil Inventories

Day trading plan for Tomorrow:

Crude Oil:

VIP Chart:
Crude Oil VIP Chart
Just as we expected, Crude Oil opening inside the range from Monday, giving us easy clues that told us to buy lows, sell highs, and avoid the middle today. 
Today’s narrow range tells us that tomorrow may be a very active day after traders took a ‘siesta’ on Tuesday. 

I am looking for an opening-print above 97.71 to begin buying, or below 96.78 to begin selling tomorrow morning.

Anchor Chart: 
Crude Oil 34 Anchor Chart
Crude Oil is trading at the highs of the price wedge on the (34) anchor chart.  We can see resistance above us at 98.82 and support below us at 94.97.  This chart is very important for longer-term traders who are looking for a longer term position in Crude Oil this week.  I would be VERY concerned trying to buy right now if you want to hold this position into end of the week, we see too much resistance overhead and the market-personality is overall bearish.

Crude Oil 21 Anchor Chart
The (21) anchor chart of Crude Oil shows us trading in a price wedge with overhead resistance at 98.09 along with a trend-line at the highs of the price wedge.  These clues tell us to be careful buying this evening, and to look for a price-reversal at the 98.00 big-round-number overnight.

Crude Oil 13 Anchor Chart
The (13) anchor is the fastest of the anchor charts, and this chart looks very bullish as we go into the Asian trading session.  We have a green light to buy in the short term; however we don’t want to buy too close to the 98.00 resistance overhead.  The only problem we see NOW is the need to buy this market at a discount, so stay patient and buy the next pullback with a profit-target at 98.00, 98.44, and 98.84.


VIP Chart:
Gold VIP Chart
Gold is showing us some very important clues this evening on the VIP chart.  we had a very narrow trading-range this morning and we closed the session smack in the middle of today’s range. 

The narrow trading-range tells us tomorrow may be a very big day of volatility and with Non-Farm Payroll news around the corner we can assume we won’t need to wait very long to see this price-action start to move.

I am buying with an opening-print above 1253.6, and selling with an opening-print below 1246.8.

Anchor Chart: 
Gold 34 Anchor Chart
Gold is trapped between major support and resistance on the (34) anchor chart this evening, so if you’re looking for a long-term play on gold you need to wait for this consolidation to get cleared up first.

Gold 21 Anchor Chart
We are very narrow and consolidated on the (21) anchor chart for Gold this evening.  I can see trend-lines above and below which makes the price wedge and tells us that we need to buy-the-lows at support and sell-the-highs at resistance during this time.  I can see an opportunity to sell short at 1263.9 and also to buy long at 1243.9.

Gold 13 Anchor Chart
We look very bearish on the (13) anchor chart of Gold this evening, which agrees with the long-term-trend on the (34) anchor we saw already.  The ideal scenario is to get short around the sell-zone at 1256.5 as we are in a downtrend.  If the price-action doesn't move higher, all I need is to get below the moving-averages (below 1252.0) and we have wide-open-space going to a profit-target down at 1243.9


VIP Chart:
Mini Russell VIP Chart
The Mini-Russell traded higher this morning in a very narrow trading-range inside the same range from Monday.  If you recall, we anticipated that price-action may get stuck around the 1100.00 big-round-number and it certainly did.

A sideways day, with a narrow trading-range, and a closing-print in the middle tells me that this market-personality is completely ‘balanced’ which tells us that we must stay patient to wait for this price-action to find a reason to move going into the overnight session.

I am selling short with an opening-print below 1086.6 and buying long with an opening-print above 1104.9.

Anchor Chart: 
Mini Russell 34 Anchor
The Mini-Russell (34) anchor chart shows us exactly what’s happening right now in the long-term.  We can clearly see the bullish price channel was broken and price-action tumbled directly to the buy-zone (support) at 1090.5 where we have no stabilized.  This is a KEY support level on the Mini-Russell because if the buyers fail to hold this support we have a big drop down to 1038.6 from here.

Mini Russell 21 Anchor
We open the (21) anchor chart to get a better look at the price-action around the major buy-zone (1090.5) as it bounced off this key support and began to trade sideways with a slightly bullish tone.  We can see a trend-line overhead as resistance along with a support level below at 1081.0.

Mini Russell 13 Anchor
Last, but certainly not least, we see the (13) anchor shows us this short term bullish trend has developed.  The market-personality feels very flat and balanced, and when I see there is NO slope to the moving-averages and there is no ‘cloud’ green or red we are definitely in-balance and need to wait patiently for SOMETHING to come along and give this market-personality a push in one direction or the other.

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