June 24, 2011
Traders prepared for major news as markets flatten out looking for clues
This has been a busy week for the commodity markets we trade most, seeing the US Dollar rising and falling on fears and confidence from Europe…its been a fun ride and we end our week with some very important news that is certainly on the minds of traders this morning.
Not much news to share overnight, the big news from yesterday was regarding crude oil and the release of strategic reserves, however we haven’t been able to see much feedback from the market on this yet. Traders ‘assume’that more supply will result from this, pushing down prices, but we will wait and see the reaction from the market this morning.
Looking at the news this morning its Friday so we know to get in early, and get out early before the volume dries up at 1100am est.
News starts at 830am this morning with GDP
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| GDP Growth SchoolOfTrade.com |
GDP growth in the first quarter for the Commerce Department’s second estimate was unrevised at up 1.8 percent annualized. The first quarter was notably softer than the 3.1 percent pace in the fourth quarter. Unfortunately, demand numbers were nudged down and inventory investment bumped up. Final sales of domestic product were revised to an annualized 0.6 percent from the initial estimate of 0.8 percent. Final sales to domestic purchasers were revised to 0.7 percent from the original estimate of 0.9 percent annualized. The downward revision to final sales was mainly in personal spending, now at up 2.2 percent instead of the initial 2.7 percent for the first quarter. Economy-wide inflation was unrevised, with the GDP price index posting at 1.9 percent.
We also have Durable Goods Orders at 830am today
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| Durable Goods Orders |
Durable goods orders fell back in April, declining 3.6 percent, following a revised 4.6 percent jump in March. Excluding transportation, new orders slipped a revised 1.6 percent, following a 2.6 percent rise in March. Weakness in the latest month was led by transportation equipment. Outside of transportation, weakness was widespread but generally followed strong gains in March. Looking ahead, manufacturing surveys for May point to deceleration but positive growth. New orders indexes for ISM and Philly Fed were modestly above breakeven. Empire State slowed but remained moderately high in positive territory.
The rest of the day after 930am Open of the US equity markets is wide open, so we will be looking for volume to slow down after 1030am and looking to wrap up trading around 11am. We may see late morning moves but we will need to have a VERY good reason to be trading…so make this lunch plans 🙂
Looking at the charts this morning…
The US Dollar is trading in a narrow range inside of a price wedge, and right on top of its big money trigger line (BMT). This tells me the markets as a whole will be searching for direction and I will be selective in my trades today until the price of the US Dollar Index is further away from the BMT and at the highs or lows of this range. I need to be very careful when I see the DX contract in the middle of a narrow price wedge, this will show sloppy markets on Crude Oil, Gold, Euro, Russell etc.
| US Dollar Index 89R SchoolOfTrade.com |
Looking at Crude Oil futures this morning its much of the same like the Dollar. Crude is in the middle (center) of a very bearish price channel, and we can see it trading sideways from 92.40 down to 89.70. I will seek to use this trading range as my guide this morning. With the dollar index in the middle, and this is an inside day on crude oil I will be looking to sell the highs, buy the lows, avoid the middle, and beware the fake-out breakout of this range until the market PROVES it to me this morning. Bearish channel tells me the high % trades are short off resistance and I will get into more detail in the trade room.
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| Crude 89Range SchoolOfTrade.com |
Looking at Gold Futures this morning we see more sideways narrow ranges. Gold is sitting on its BMT, right in the middle of the price wedge looking very similar to the US Dollar index. The Dollar will highly correlate to the Gold market, so this explains why they look similar. The big thing on gold today will be if the US dollar index an break out of this narrow range, it will bring the gold along with it, and will give us some great trading opportunities. I will try my hardest to avoid the temptation to trade gold today until we see the dollar start to move with some direction and personality.
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| Gold 89Range SchoolOfTrade.com |
