Thursday, March 6, 2014

Day Trading Gold, Crude Oil, E-Mini Russell | SchoolOfTrade Newsletter 03/06/14

“I can’t imagine a person becoming a success who doesn't give this game of life everything he’s got.” – Walter Cronkite

Reflections from Today:
·       Today’s Trades:
o   Crude Oil: Selling opportunities down to 100.30
o   Gold:  Buying opportunities after ECB Announcement
o   Mini-Russell: Range-bound market, sell highs & buy lows
·       Markets Today:
o   Crude Oil: 195-ticks (+0.90%) @ 101.89
o   Gold: 226-ticks (+1.03%) @ 1350.6
o   Mini-Russell: 83-ticks (-0.15%) @ 1203.6
·       News Today:
o   ECB Rate Announcement sends Gold higher
o   Jobless Claims push lower ahead of Non-Farm Payrolls (3-mo lows)
o   Factory Orders come out lower than expected
o   Ukraine:  Crimea Parliament votes to join Russia, Ukraine disagrees, US and EU call it
·       This Day In History:
o   Mar 6, 1899:  Friedrich Bayer & Co. patent Aspirin; rumors surround WHO created it
o   Mar 6, 1926: Alan Greenspan is born in New York City
o   Mar 6, 1930:  Clarence Birdseye invents ‘quick freezing’ technology;
§  Frozen foods hit store shelves in Mass. for the first time
§  Company sold Goldman Sachs for $22M, later becomes General Foods Co.
o   Mar 6, 1959:  Texas Instruments introduce the first ‘integrated circuit’, known today as the ‘microchip’.
o   Mar 6, 1981:  Walter Cronkite, “the most trusted man in America” retires from Evening News, replaced by Dan Rather
§  Cronkite:  only non-NASA recipient of Moon-Rock Award
§  Cronkite:  famous for saying, “and that’s the way it is”
§  Cronkite:  passed away on July 17, 2009
o   Mar 6, 1997:  Queen Elizabeth II launches the first ‘Royal Website’
·       News Tomorrow
o   8:30am EST:  (US) Non-Farm Payrolls
o   8:30am EST:   (US) International Trade

Economic News for Tomorrow:

Friday's News Schedule
Tomorrow is one of the most important days in the month of March; the first Friday of every month is when we see the release of the Non-Farm Payroll Jobs Report. 

This is one of the biggest news events we get as traders, and with so many different components such as Unemployment Rate, hourly earnings, workforce participation, and the number of news jobs in the last 30 days… everyone will be watching this important news report.

We need to be mentally prepared for this news to be released tomorrow and be ready for 1 of 2 scenarios.

First, we are expecting to see 150,000 new jobs added in the Month of February, and if the news comes out as-expected we will see price-action trade sideways for a few minutes until it finally finds a direction to move in.  In this scenario we want to sit-on-hands and wait for the “slop and chop” to end and find a trend direction that we can follow. 

We do NOT want to try and force the breakout if we see a sideways-trading-range, stay patient and wait for someone ELSE to try and force the breakout, and then enter in the direction of the new trend on a pullback.

Second, if the news tomorrow is higher or lower than we expect we will likely see a very violent reaction to the news, which means we will have to wait patiently for 15-minutes until the price-action calms down enough for us to enter into a trade SAFELY.

If this news catches the market off-guard tomorrow morning we need to be careful because there will be very little liquidity and a whole lot of volatility that us day traders will have a hard time trading SAFELY.  The biggest concern when the price-action moves too quickly is that your stop-loss won’t protect you against large losses, so be careful not to trade too quickly after the news comes out tomorrow morning.

And lastly, after the news is released we will have a window of opportunity that will last from 8:45am through 10:30am EST.  After 10:30am EST on Friday we will start seeing the volume diminish as traders have already placed their ‘bets’ and will finish up the week and head into the weekend. 

We will be watching the price-action and market-personality very closely tomorrow morning, looking for clues to when the “party is over”.

o   8:30am EST:  (US) Non-Farm Payrolls
o   8:30am EST:   (US) International Trade

Day trading plan for Tomorrow:

Crude Oil:

VIP Chart:

Crude Oil VIP Chart
Crude Oil pushed lower this morning all the way down to the 100.00 big-round-number before a ‘short-covering rally’ took the price off the lows and back above 101.00.  The reality is very clear; without the concern in Russia, traders clearly see value for Crude Oil trading around the big-round-number of 100.00 and we expect to see that level come into focus if tomorrow’s Non-Farm Payroll report is anything but exceptionally bullish.

Anchor Chart:

Crude Oil 55 Anchor Chart
The 55 anchor chart of Crude Oil shows us trading lower, below the sell-zone at 101.81 and testing the support at 100.48.  The key to being prepared for Friday’s Non-Farm Payroll report is to have all of our technical support and resistance levels ready for ANYTHING tomorrow morning.  We have resistance levels overhead at 107.95, 110.10 and even 112.35 that we will be using if needed tomorrow.  
Furthermore, we have support levels below us at 98.09, 96.40, 94.00, 92.58 and 90.36 which we will use as profit-targets or price-reversal levels tomorrow after the news is released.

Crude Oil 21 Anchor Chart
The 21 anchor chart also shows us some very important clues that we can use on Friday.  First, we have resistance levels overhead at 102.68, 103.28, 104.13, 104.64, 105.22 and 106.24.  Second, we also have support levels below us at 100.42, 99.81, and 98.82 which will be used as profit-targets for selling opportunities, or price-reversal levels for buying opportunities tomorrow after the news is released.

Crude Oil 13 Anchor Chart
The 13 anchor chart of Crude Oil shows us in a great position to be selling this evening, however, without knowing how tomorrow’s news will come out we must sit-on-hands this evening and wait for tomorrow’s report before we enter into new positions.  We have resistance levels overhead this evening at 102.68, 13.28, 104.18, and 104.64 which we will use for profit-targets after buying opportunities or price-reversal levels for selling opportunities tomorrow.  In addition, we also have support levels below us at 100.55, 100.13, 100.00, and 98.64.

Our plan for trading Crude Oil this evening is to sit-on-hands and wait for 8:45am EST tomorrow when we will re-assess the situation and use the information we have at that time to make an educated trading decision.  We will be very careful trading on Friday because the volatility tends to be tremendous on Non-Farm Payroll Friday, and we encourage you to do the same.

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