Wednesday, October 8, 2014

Can we BUY on Thursday? | SchoolOfTrade Newsletter 10/08/14



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“Desire is the key to motivation, but it’s determination and commitment to an unrelenting pursuit of your goal — a commitment to excellence — that will enable you to attain the success you seek.” –Mario Andretti
Notes for Tonight’s Newsletter:
·       Markets began the session with sluggish price-action but then reacted strongly to the ‘FOMC Meeting Minutes’ released mid-afternoon
·       All markets are still bearish (technically) and we look forward to more trading opportunities on Thursday!
·       Equity markets rally this afternoon on bullish FOMC Meeting Minutes Report, biggest 1-day move higher all year!
·       Crude Oil pushes lower to $87.50, a 16-month low, as the global slowdown as sellers place their bets against the ‘black gold’.
·       Gold rises after FOMC Meeting Minutes confirm we won’t see higher rates in the US anytime soon (low rates are bearish for currencies and bullish for the yellow metal)
·       ECB’s Mario Draghi speaks in Washington Thursday @ 11:00am EST


Gold:
·       Fundamental: Gold continues to hold above $1,200/oz. today and we can point the finger at the FOMC Meeting Minutes and the ‘dovish’ wording of the report.  It is very clear that the Fed is worried about the strength of our US-dollar (which makes our exports too expensive) and is going to keep rates very low for the foreseeable future because they are concerned that raising rates will hurt the economies overseas and the strong dollar is weighing down our exports around the world.  For this reason we are holding tight above $1200 and we will continue to watch the market-sentiment the rest of the week.
·       Technical:  Gold reacted to the FOMC Minutes by trading higher, all the way up the highs of the trading-range at $1225.0.  These highs make for excellent selling opportunities and we will remain bearish until we can break and hold above the key resistance area of $1225.

Crude Oil:
·       FundamentalThe scenario keeps getting worse for the price of Crude Oil, while the ‘soccer moms’ around the world rejoice with $87/barrel Crude Oil prices today!  A strong US-dollar, global economic slowdown, warm weather and now today we see a shocking build of Crude Oil Inventories from our EIA report at 10:30am EST.  Inventories are building while the demand is shrinking for the ‘black gold’ and that will likely continue pushing prices lower until OPEC and other producers start cutting production this winter, which may become more urgent that they originally thought.
·       Technical: Crude Oil (the ONLY market that didn’t rally this afternoon) made new lower-lows early in today’s trading session but got stuck in the mud with today’s Inventory report.  We have Crude Oil at the lows, and we don’t want to sell the lows, so we are staying patient to find the best selling opportunities up at the highs of the range around 88.18 and 89.31.

Mini-Russell:
·       Fundamental:  “When bad news is really good news.”  We had the biggest 1-day rally of the year today in US equities, and the reason for this has nothing to do with GOOD news, but the reality that rates are going to stay low for at least the majority of 2015 which means the ‘easy money’ will keep flooding the stock market in the US.  With the ‘easy money’ available in the US traders and investors saw an easy buying opportunity today and they took it!

·       Technical: The Mini-Russell rallied off the lows this afternoon and moved all the way up to the sell-zone at 1089.0.  We have a line-in-the-sand resistance at 1106.5, which means we are still bearish and will expect this price-action to try to test $1100.0 before making the move lower.

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