CLZ12 - Update for the week of October 26th, 2012

Welcome back to CRI's ongoing Crude Oil Day Trading Blog.
Price analysis you see is CLZ12, for the week of October 26th, 2012:

Market Overview:  As has been the case for several weeks now, the market is building up to the all important US Presidential election in early November. Energy prices have eased appreciably of late in the face of rising domestic inventories, easing mid-east tensions, reduced global growth prospects and maybe a little 'tinkering' (by those in power wishing to stay in power) too. Regardless, prices are currently falling and well established trends suggest lower rather than higher prices ought to be expected over the short term. Having said that, prices have fallen quit a bit of late suggesting some sort of 'dead-cat' bounce back into resistance isn't out of the question either.

Weekly highlight: The failure of 90.27 painted a rather bleak outlook for price and indeed it fell. The market has found some support near the $85.00 area and may be basing but that seems a little early to suppose give the well defined daily/weekly bearish ab=cd price patterns, the dramatic reversal in CoT Institutional holdings, the 'bottomy' action in the US Dollar index and the proximity of the US Presidential elections. 

Trading Strategy (1 week): Daily and weekly ab=cd price patterns suggest the market wants to revist the low $80 area. Additionally, there is a rather significant daily price gap that ought to be filled near $79.47. Having said that, the market is oversold in the short term and my hunch is we may spend a good portion of the coming week back-filling. a 50% retracement of last week's sell-off could easily bring price back into the $90.00 area and that shall be my general target going forward - as long as $84.94 is not broken. The current 60M/4hr OTE Short SS is near $91.00. Should we get a violent rally back up into this area I shall be looking to short in earnest once again.

Mental State Review: last week's post, "My confidence is very high IF I am patient and wait for set ups. My problem is impatience right now. My goal for this coming week is to do less trading and try to only take trades based on my plan - regardless how few they may be." I did exactly this to begin the week (and posted a great OTE short to start the week last Monday) but found that by time Friday rolled around I was over trading (out of inpatients and boredom) once again. I now recognize this and will work on measures to keep trading down as the week progresses.

 

Trading Plan for this coming week: Watching for and using 'OTE' setups to identify buying and selling opportunities at key support/resistance levels on the 60m/4hour charts. Once trade zones are entered, drill down to 5m/15m for OTE entry points (coupled with momentum/volume divergences) and follow the trade process.

Picture everyday my ideal trade....looking for momentum divergences at or near OTE zones on 60M/4hr charts; tight reversal, clean additional OTE entry signals on shorter time frames where tgt is +.42 and stop is -.21....I have come to see that profitable day traders do not always have to trade....so there simply is no hurry. Trades they do enter are ideally looking for a 'range extension' in the opposite direction. While trading 1 lots does limit this participation, consistently shooting for +41 tick trades (while risking $215/trade) seems like a realistic target/goal for the $30,000 ($500/day max risk) combine account.

Trade Process: Once 60m/4hour OTE sweet spots are entered and market has confirmed vol/mom divergence, b/s 1 aoco (-.21/+.41) at 5m OTE entry levels where prev. peak (+/-.10) is no greater than 21 ticks....Either 2 immediate losses ($-430) or three wrong trades in a row (-$645.00) equates to end of day. Gains of more than $1000/day equates to end of day - and a big pat on the back.

That's all for this post,
Brian Beamish FCSI
The Canadian Rational Investor
the_rational_investor@yahoo.com
http://www.therationalinvestor.ca
http://crisdaytrading.blogspot.ca/

CLZ12 - Update for October 19th, 2012

Welcome back to CRI's ongoing Crude Oil Day Trading Blog.
Price analysis you see is CLZ12, for the week of October 19th, 2012:
 

Market Overview:  The much anticipated November US Presidential election and the very worrisome 'fiscal cliff' are quickly approaching and one can see the market setting itself up for the event. Crude Oil itself recently pushed up to the psychologically important $100/barrel level only to back off just as quickly. Given energy's significant role within the electoral process, one has to wonder if a little 'tinkering' has gone on of late by those in power to remain in power. Regardless, the summer seasonally long trade in the energies has come and gone; now it appears it's time to do some back-filling...

Weekly highlight: This past week saw yet another bearish price pattern emerge. The failure through 90.27 registered a double top price pattern and suggests sellers are still in control.

Trading Strategy (1 month): While consolidating of late, the market continues to point bearishly towards the low to mid $80 area. The recent double top failure on the daily charts suggests we have further to go on the downside but suggests too that price action higher ought to be limited for the time being.

Mental State Review: My confidence is very high IF I am patient and wait for set ups. My problem is impatience right now. My goal for this coming week is to do less trading and try to only take trades based on my plan - regardless how few they may be....

 

Trading Plan for this coming week: Watching for and using 'OTE' setups to identify buying and selling opportunities at key support/resistance levels on the 60m/4hour charts. Once trade zones are entered, drill down to 5m/15m for OTE entry points (coupled with momentum/volume divergences) and follow the trade process.

Picture everyday my ideal trade....looking for momentum divergences at or near OTE zones on 1hr/4hr charts; tight reversal, clean additional OTE entry signals on shorter time frames where tgt is +.42 and stop is -.21....I have come to see that profitable day traders do not always have to trade....so there simply is no hurry. Trades they do enter are ideally looking for a 'range extension' in the opposite direction. While trading 1 lots does limit this participation, consistently shooting for +40 tick trades seems like a realistic target/goal for the $30,000 ($500/day max risk) combine account.

Trade Process: Once 60m/4hour OTE sweet spots are entered and market has confirmed vol/mom divergence, b/s 1 aoco (-.21/+.41) at 5m OTE entry levels where prev. peak (+/-.10) is no greater than 21 ticks....Either 2 immediate losses ($-430) or three wrong trades in a row = -$645.00 equates to end of day. Gains of more than $1000/day equates to end of day.

That's all for this post,
Brian Beamish FCSI
The Canadian Rational Investor
the_rational_investor@yahoo.com
http://www.therationalinvestor.ca
http://crisdaytrading.blogspot.ca/

Monday:
Today started with a nice rally into an OTE short ss (90.98) and a subsiquent sale. Below is a screen capture of the trade setup, entry and exit. A very good start to the week!

 

CLX12 - Update for October 5th, 2012

Welcome back to CRI's ongoing Crude Oil Day Trading Blog. 
Price analysis you see is CLX12, for the week of October 5th, 2012:

An interesting debate: What should a reader take away from this blog? Apart from commodities day trading, I promote myself as a rational investor - or one who analyzes an asset's value from several perspectives before deciding (based on strict risk reward models) to potentially invest.  As a 'student of the market' I have been actively employed and or have traded the markets for the past twenty five years. I have a highly coveted ethics designation from the Canadian Securities Institute and have taught rooms full of people on both how to understand capital markets and properly invest/speculate given their personal circumstances. I believe my analysis is based on sound principles established within both the fundamentalist and technician camps (hence the name The Rational Investor). Having said that, this game we call 'investing' is more of an art than a science and I am by no means an expert - nor do I promote myself to be one. My posts here are for educational purposes only. I am really posting for my benefit. But as I have said before, if you gain any benefit then that is great. However, if you disagree with my analysis then it was worth the price of admission.

CoT under the microscope: One can always use a refresher on any analysis method and so to that end I have taken the time this week to look at recent CoT data in a little more detail (just to confirm my recent interpretation of market trends). As well as the most recently reported raw CoT data (found on each week's chart summary image) this week I have included a really nicely laid out graphic histogram of net CoT positions as reported by CoTpricecharts.com. 

Two pronged analysis would suggest a few things. 

1. Commercials are on the whole still leaning slightly bullishly over the medium term. Looking at the histogram we see that indeed, as of three reports ago we where challenging the extreme highs of the late winter early spring. Within this broader framework we do see that in the short term hedgers have increased their net long and reduced their net short exposure materially (as is highlighted on both the histogram and  with this past week's raw data release).

2. Institutions are VERY bullish over the medium term. This dramatic macro stance can be both seen in the raw data (more than a 3:1 long vs. short ratio) but also in both the histogram's net long position and the fact that we broke the spring highs. Here too (like the commercials) there has been a material unwinding of that dramatic extreme as the raw report and the histogram show net long liquidation and short position taking over the past week.

The question ultimately is, is the recent turn in the data the start of a new trend or will we continue previously established trends?

My interpretation of the data is: given the proximity of the current price to the average price of Crude Oil over the past 6 months, 1 year and 2 years, it is not surprising to see commercials basically flat with a slight upside bias. At the same time, given Crude's monthly bullish price objective and significant market uncertainty (further QE's vs. 'fiscal cliff' vs. mid-east tensions) it would seem the 'smart money' is long in a rather large way...

Market Overview:  Little change to my market overview: The much anticipated November US Presidential election and the very worrisome 'fiscal cliff' are quickly approaching and one can see the market setting itself up for the event. Interestingly, equity markets seem to be 'going parabolic' into the event while the US dollar is consolidating. Crude Oil itself recently pushed up to the psychologically important $100/barrel level only to back off just as quickly. Given energy's significant role within the electoral process, one has to wonder if a little 'tinkering' has gone on of late by those in power to remain in power. Regardless, the summer seasonally long trade in the energies has come and gone; now it appears it's time to do some back-filling...

Weekly highlight: This past week saw the price try to take out the daily 'C' point (93.84) only to fail miserably. With 88.95 level being taken out the daily bear ab=cd target of 84.07 is still very much in play. 

Trading Strategy (1 month): Coupled with extreme volatility, price is slowly working its way down to the bearish ab=cd target of 84.07. As long as 93.84 is not taken out, I shall be looking for prices to continue to slip until the bear ab=cd target has been hit. Use hourly/4hour OTE levels to stalk mom/vol divergences to take short positions.

Mental State Review: It is important to reward yourself when you have followed a well laid out plan to success. To that end I had a couple very good trades this past week and feel proud of the transition that has taken place in my trading. Ironically, it would seem, I have come full circle in about 1 year. Where I started full of confidence (not really knowing why what I did worked most of the time) to now having a well laid out trading plan that really focuses my attention on good entries with relatively low risk. Here below then is one of those trades from this past week...well done Brian.

 

 

Trading Plan for this coming week: Watching for and using 'OTE' setups to identify buying and selling opportunities at key support/resistance levels on the 60m/4hour charts. Once trade zones are entered, drill down to 5m/15m for OTE entry points and follow the trade process.

Picture everyday my ideal trade....looking for momentum divergences at or near OTE zones on 1hr/4hr charts; tight reversal, clean additional OTE entry signals on shorter time frames where tgt is +.42 and stop is -.21.... 

Trade Process: b/s 1 aoco (-.21/+.41) at 5m OTE entry levels where prev. peak (+/-.10) is no greater than 21 ticks....three wrong trades in a row = -$645.00 and end of day

Focus for the week: I ended the past week on a good note. I have to watch out not to be over confident starting the week. 'slow and steady wins the race'...

I have been impressed with a recently posted 'on pit open' trade one of the TsT members has created. While the window is open one ought to take advantage of every market anomaly one can. The 'On open trade' trading plan will be to b/s 1 (AOCO -.21/+.41) on st +/- 3 ticks above/below 5:55-6AM 5m 24hour CL chart bar. 

That's all for this post,
Brian Beamish FCSI
The Canadian Rational Investor
the_rational_investor@yahoo.com
http://www.therationalinvestor.ca
http://crisdaytrading.blogspot.ca/