Wednesday, April 2, 2014

Day Trading Crude Oil, Gold, E-Mini Russell | SchoolOfTrade Newsletter 04/02/14

Original Floor of S&P 500
“Would you like me to give you a formula for success? It’s quite simple, really. Double your rate of failure. You are thinking of failure as the enemy of success. But it isn’t at all. You can be discouraged by failure or you can learn from it, So go ahead and make mistakes. Make all you can. Because remember that’s where you will find success.” -- Thomas J. Watson 
Reflections from Today:

·      Today’s Trades:
o   Crude Oil: 
§  Looking for buying opportunities
§  Market trading sideways
o   Gold:
§  Looking for Selling opportunities @ 1294.8
§  Triggered the short @ 11:30am EST
o   Mini-Russell: 
§  Looking for buying opportunities @ 1180.4
§  No pullback yet, still waiting
·      Markets Today:
o   Markets were VERY quiet this morning, got a little better this afternoon. 
o   Traders are apparently preparing ahead of tomorrow’s ECB meeting and Friday’s Non-Farm Payroll report in the US.
o   Crude Oil: 
§  VERY quiet in the US Session
§  Sideways-trading-range  below $100.00
§  97-ticks of range (narrow)
§  Closing-print @ 99.41 (-0.30%)
o   Gold:
§  VERY quiet in the US Session
§  “Short-covering rally” (bullish) in the London Session
§  Trading sideways in the US Session
§  139 ticks of range (typical)
§  Closing-print @ 1289.6 (+0.83%)
o   Mini-Russell:
§  VERY quiet in the US Session
§  Sideways, with a slight bullish tone
§  83-ticks of range (very narrow)
§  Closing-print @ 1189.0 (+0.24%)
·      News Today:
o   8:15am:  ADP Employment Report:  showing a jump in payrolls ahead of Friday’s Non-Farm Payroll Report
o   10:00am:  Factory Orders:  exceeded expectations, showing signs of life after the bad weather caused big concerns in Manufacturing in the US
o   10:30am:  Crude Oil Inventories:  Inventories fell for the first time in 4 weeks, but that didn’t get anyone excited because we know the supply was cut drastically after the bad weather led to a build-up of inventories.
·      This Day In History:
o   April 2, 1792:  Congress passes the ‘Coinage Act’ which establishes the US Mint.
o   April 2, 1956: For the first time, the NYSE permits the Opening-bell to be rung by an outside guest…Leonard Ross, who won the opportunity on a game-show about stock-market trivia
o   April 2, 1982:  Futures contracts become available for the S&P 500 for the first time, available on the Chicago Mercantile Exchange
·      News Tomorrow
o   7:15pm: (JP) Manufacturing
o   8:30pm:  (AU) Retail Sales
o   9:45pm: (CH) Manufacturing
o   3:50am: (FR) Manufacturing
o   4:00am: (EU) Manufacturing
o   4:30am: (GB) PMI
o   7:45am: (ECB) Rate Announcement
o   8:30am: (US) International Trade & Jobless Claims
o   10:00am: (US) ISM Non-Manufacturing
o   10:30am: (US) Natural Gas Inventories
o   Thursday Afternoon:  beware price-action ahead of Non-Farm Payroll on Friday!

Economic News for Tomorrow:

News for Thursday
We have a lot of important news on the schedule for tomorrow, and we have Red-Star News to-be-released later this evening in Asia!

We begin this evening in Asia with Red-Star News from Australia and China which is certain to get the futures markets moving well going into the London trading session tomorrow morning at 3:00am EST.

In London, we have a slew of manufacturing reports from various EU-countries, but the BIG NEWS tomorrow is the highly-anticipated “ECB Rate Announcement” which is similar to the FOMC Day we have here in the United States.  Rumors have been circulating around the news wires this week that tomorrow we may hear some surprising information regarding inflation and what the ECB intends to do about it. 

With SO much news in the London trading session tomorrow morning, we will expect to see a sluggish opening-bell in the US markets, but that won’t last very long because we have a LOT of important news in the US as well.

In the US tomorrow morning we have our own Red-Star News to work with, starting with 8:30am EST, International Trade and Jobless Claims.

Later in the session tomorrow we have Natural Gas Inventories, and with NG prices being at all-time highs earlier this year we know that many people love to trade the ‘natty-gas’ so be ready for the biggest day of the week of NG traders.

The end of the session tomorrow will most likely be rather slow because we have our BIGGEST Red-Star News event on Friday, Non-Farm Payrolls. 

If you put yourself in the shoes of an “institutional-sized trader” (someone who manages 100’s of millions of other people’s money) you will know that when you trade LARGE positions you have a hard time getting IN and getting OUT without actually moving the market in the process. 

The reason why tomorrow afternoon will likely be very slow is because these large-position traders are forced to sit-on-hands because they won’t be able to get OUT of their positions on Friday morning before it’s too late after the Non-Farm Payroll news is released.  Volume will be lighter than usual with these traders on the sidelines.

Trading opportunities for Tomorrow:

Crude Oil:
Yesterday on Crude Oil we discussed looking for buying opportunities, however, the price-action has been nothing but bearish, so we go back to the drawing-board.

Crude Oil VIP Chart:
Crude Oil VIP Chart
Crude Oil had a VERY wide trading-range on Tuesday, which is why we had expected today’s trading-range to be quite narrow, and it certainly was.

We had a bearish opening-bell this morning; however, the buyers took back control with a closing-print at the highs.  The volume suggests we are balanced, right in the middle of today’s trading-range.

Crude Oil 64 Anchor Chart:
Crude Oil 64 Anchor Chart
The 64-anchor chart is the exact same today as it was last week… we can still see price-action hovering around the grand-daddy of all big-round-numbers, which is the $100/barrel.  We know this area on our chart tells us to expect sloppy price-action until we get away from the middle of this range and the $100/barrel big-round-number.

Crude Oil 16 Anchor Chart:
Crude Oil 16 Anchor Chart
Just as we expected, Crude Oil traders took a break from the action today after yesterday’s enormous trading-range.  This morning we saw Crude Oil trading sideways just inside this buy-zone from 99.57 to 98.94. 

We can see wide-open-spaces above us up to 100.08 and then up to 100.55, or down to 98.80 and then to 98.04.

With today’s narrow range on this 16-anchor chart we expect to see great trading opportunities on Thursday.

Yesterday on Gold we called a trade short @ 1294.8, which triggered the short today @ 11:30am EST with a profit-target at 1272.7

Gold VIP Chart:
Gold VIP Chart
Gold traders ‘covered their shorts’ this morning in the London trading session, which resulted in prices moving higher in London, and then trading sideways in the US session.  We can see the closing-print and the volume were both in the MIDDLE of today’s range, which suggests we are in-balance ahead of tomorrow’s ECB Announcement.

Gold 64 Anchor Chart:
Gold 64 Anchor Chart
Gold tumbled off the highs of the range earlier in the week, but now we are stuck at the top of this buy-zone at 1287.7 as we wait to hear from the ECB tomorrow and the Labor Market in the US on Friday.

Gold 16 Anchor Chart:
Gold 16 Anchor Chart
We were triggered short into our Gold trade @ 1294.8 earlier this morning, and we can see profit-targets below us at 1281.1, 1272.7 and 1266.7.

Gold pushed up above the key moving-averages on this 16-anchor chart, and as of 5pm EST we need to break below the support at 1288.0 in order to find the wide-open-space to fall down to our profit-target at the lows of this range.

Mini-Russell :
Yesterday on Mini-Russell we called a trade LONG, however the price-action has not pulled-back enough for us to enter the trade so we will wait patiently for the right opportunity.

Mini-Russell VIP Chart:
Russell VIP Chart
The VIP chart of the Mini-Russell shows us a very narrow trading-range in today’s session after the opening-bell put us ABOVE yesterday’s highs, only to tumble back inside the range from yesterday.  We ‘grinded’ higher this morning on Mini-Russell in a very sleepy morning session that finally got moving this afternoon.

Mini-Russell 64 Anchor Chart:
Russell 64 Anchor Chart
The 64-anchor chart of the Mini-Russell shows us trading directly into the resistance at the highs of this price wedge.  The trend-line acts as major resistance, but then we have another sell-zone right above us at 1194.0.  We will be watching for the buyers to try and test the big-round-number at $1200, but if FAIL at these highs we will get some easy selling opportunities down to the 1165.8.

Mini-Russell 16 Anchor Chart:
Russell 16 Anchor Chart
We were looking for a pullback this morning on the Mini-Russell into the 1180.0 area but the price-action never gave us the opportunity.
We can see the Mini-Russell traded mostly sideways today with a bullish tone to it at the end of the session.

We have a LOT of resistance directly overhead right now, so we will focus on buying at a discounted price using the 1186.3 or 1183.9 buy-zones for the entries LONG.  We have profit-targets above us at 1191.2, 1197.5, 1198.2 and 1202.4.

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