Thursday, April 3, 2014

Day Trading Crude Oil, Gold, E-Mini Russell | SchoolOfTrade Newsletter 04/03/14

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“Enter every activity without giving mental recognition to the possibility of defeat. Concentrate on your strengths, instead of your weaknesses… on your powers, instead of your problems.” –Paul J. Meyer

Reflections from Today:
·      Markets Today:
o   Very Quiet session ahead of Friday’s Non-Farm Payroll Report
o   Crude Oil: 
§  Back to $100 big-round-number
§  142 ticks of range (typical)
§  Closing-print @ 100.43 (+0.03%)
o   Gold:
§  Sideways-trading-range
§  108 ticks of range (narrow)
§  Closing-print @ 1286.6.9 (-0.02%)
o   Mini-Russell:
§  Tumbled off the anchor-chart resistance
§  193 ticks of range (wide)
§  Closing-print @ 1179.1 (-0.85%)
·      News Today:
o   8:30am:  International Trade:  Trade-deficit widens; lowers Q1 GDP expectations, shows slowdown in emerging market consumption.
o   8:30am:  Jobless Claims: moved higher, but still positive report, and below the 4-week average.
o   10:00am:  ISM Non-Manufacturing:  exceeded expectations; new orders, and inventories are positive
·      This Day In History:
o   April 3, 1803:  US President Thomas Jefferson signs the “Louisiana Purchase which cost $11.25M (828,000 square miles @ $.04 per acre) and was borrowed money from European Investors.  This single land-buy doubles the size of the US and offers new opportunity to US citizens. 
o   April 3, 1860:  First Pony Express service begins, cutting delivery to California from 3 months to 10 days.  The service went bankrupt in less than a year, but sparked interest in postal-delivery.
o   April 3, 1974:  “Super Tornado Outbreak” struck 13 states in the US
o   April 3, 2004:  14-year-old soccer phenom, Freddy Adu, becomes the youngest US professional athlete in over 100 years
·      News Tomorrow
o   8:30am EST:  (US) Non-Farm Payroll
o   10:45am EST:  Weekend Begins!

Economic News for Tomorrow:

Friday's Economic News
We have been waiting all week to finally see Friday’s Non-Farm Payroll report, and tomorrow we have the biggest news event of the month at 8:30am EST in the United States.

There are two (2) important things to keep in mind this evening and tomorrow morning as we trade the Non-Farm Payroll report.

First, be careful before the report is release.  We are going to see very low volume, and tight trading-ranges ahead of tomorrow’s 8:30am EST release of the Non-Farm Payroll report.  It is not recommended to be looking for any trends or breakouts.  If anything, the only trading opportunities we will get are price-reversals.

Second, after the news is released it may be very quiet, or it may be extremely volatile, so wait 10-15 minutes before you enter a new trade.  We have been hearing about this news report for the last 10 days, so we know that EVERYONE has been aware of the analyst’s expectations, which means that today’s current prices in the stock & commodities markets have already ‘priced in the news’ ahead of the actual report tomorrow.

Because of the phenomenon of ‘pricing in the news’ we can expect to see a quiet reaction tomorrow morning if the news comes out ‘as-expected.’  If we don’t get anything out of the normal tomorrow you will likely see the market-personality very sleepy and sideways for 10-15 minutes before it finds a trend to move with.

On the flip-side, if the news tomorrow morning is ‘outside expectations’ this will catch everyone off-guard and you will see a violent reaction to the news because many traders will be acting on emotion, rather than a plan, and price-action will be too difficult to trade safely without enormous stops.

Either way you slice it, tomorrow’s news is very important, but we need to be patient with it.  if the news comes out as-expected we will wait 10-15 minutes to see where the market-makers want to take it. 

If the news comes in ‘outside expectations’ we will likely see such volatility that we won’t be able to trade it safely, so we will wait 10-15 minutes to allow the price-action to calm down and then we will trade with the new trend that forms on the chart.

Trading opportunities for Tomorrow:

Crude Oil:

Crude Oil VIP Chart:
Crude Oil VIP Chart
Crude Oil began the session inside the range from Wednesday on very low volume, but shortly after 11:00am EST we saw short-sellers take profit and price was pushed higher to test the $100/barrel big-round-number.  We can assume this $100/barrel will be an easy resting place ahead of tomorrow’s Non-Farm Payroll news.

Crude Oil 64 Anchor Chart:
Crude Oil 64 Anchor Chart
The 64-anchor chart of Crude Oil Futures shows us right in the middle of the price wedge and on top of the big-round-number at $100/barrel.  This is a very difficult area on this chart, and professional traders will use this location as a big clue to trade carefully until we can push higher or lower after the news is released tomorrow morning.

Crude Oil 16 Anchor Chart:
Crude Oil 16 Anchor Chart
Crude Oil pushed higher today, off the support zone at 99.57 and almost all the way up to the sell-zone at 100.55 where we have been looking for selling opportunities this week.  We will sit-on-hands this evening and tomorrow morning before the release of Non-Farm Payrolls News at 8:30am EST.


Gold VIP Chart:
Gold VIP Chart
 It should be no surprise to see Gold trading sideways this morning on this VIP chart because we know that tomorrow’s Non-Farm Payroll report is going to affect Gold futures more than any other market. 

If you look closely you can see today’s price-action spent the entire session on the previous week LOWS at 1286.6, which suggests that the sellers are waiting to see tomorrow’s news before getting short once again.

Gold 64 Anchor Chart:
Gold 64 Anchor Chart
Gold is sitting right on the highs of the buy-zone at 1287.7 on this 64-anchor chart.  We made some awesome profit selling short earlier this week on Gold futures, but for now we have price-action resting ahead of tomorrow’s news report.  We could easily push higher up to 1335.4 or lower to 1262.8 and 1227.3.

Gold 16 Anchor Chart:
Gold 16 Anchor Chart
We had to “cover” our short position this afternoon (short from 1294.8) ahead of tomorrow’s news, but that last trade caps off a great week of selling opportunities ahead of tomorrow’s report.

We don’t have many changes to this 16-anchor chart of Gold futures this evening.  We are trading sideways ahead of the Non-Farm Payroll news tomorrow, so we will wait and see what tomorrow’s personality looks like before we try to predict our next trading opportunities.

Mini-Russell :

Mini-Russell VIP Chart:

Russell VIP Chart
The Mini-Russell pushed lower this towards the end of the session today, after spending the first hour trying to get above yesterday’s highs and failing.  

The volume analysis of this VIP chart tells us that this move lower BEGAN on ‘profit taking’ and then quickly turned into a speculators-short-selling as we saw more volume at the lows of the range.

I think the most important levels for the Mini-Russell at the previous week’s highs at 1193.8 and lows at 1141.1.  These will be on my radar tomorrow for reversal locations and profit-targets.

Mini-Russell 64 Anchor Chart:
Russell 64 anchor chart
We finally collapsed at the highs of this price wedge on the 64-anchor chart of the mighty Mini-Russell after spending the last 24 hours wondering if these buyers were ever going to give up on re-testing the big-round-number at $1200.

Furthermore, we can see price-action sitting in the middle of this range, with support at 1166.1 below us, and 1194.0 resistance above us ahead of tomorrow’s news report.

Mini-Russell 16 Anchor Chart:
Russell 16 Anchor chart
We’re trapped between 2 key moving-averages this evening after profit-taking took the Mini-Russell off its highs and pushed it back down into the range from earlier this week.  We need to get higher, lower, SOMEWHERE ELSE besides stuck in the middle between these support and resistance areas on the chart.

We will look for selling opportunities at 1187.0 at the top of this range, and buying opportunities below us at the 1166.1, however remember we will be waiting for tomorrow’s Non-Farm Payroll news before we do anything.

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