No positions were opened today as a consequence of the new low in US oil within the first 30 minutes of the trading session. DUGs rising wedge did play out and its currently retesting resistance. Most energy stocks gained slightly. Lets see what Monday brings. CHK report earnings on the last day of the month.
This has been a very generous forum thread over at FTV and is well worth a look.
Is oil getting ready for a reversal and what of energy stocks in general?
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Before the fall in oil we saw a lot of money coming out of energy heavyweights. Todays price action in USO combined with the falling wedge on the futures contract ( its not clear on USO ) to me is a signal to be on alert for a buy signal . We have hit our first fib level on USO at 99.81 and are left with a dragonfly. The volume isnt fantastic but when you look at some of the energy stocks there are some showing signs of recovery. CHK and GMXR are such examples. GMXR is covered in break out traders latest video at free trading videos and here is a chart of my own. CHK . Its made huge moves to the downside but seems to have bounced hard.
This is one to keep an eye on but not for too long I feel. Airlines are showing weakness again so have we just seen the previous game of opposite moves between oil and airlines on a bigger scale ? I will assess tommorrows action but would feel safe to open a small position with a stop at 47 with a target of 59 bucks ( based on closing price of 49.06) . I will watch its first 30 minutes of trading and be ready for a quick entry especially if no selling arrives. If Oil looks like its plowing out new lows though I will give the position extra management time and perhaps scale out early. This stock is heavily owned by institutions and insiders.
In other energy stocks keep an eye on DUG , its looking a little wedge like on the daily / 60 minute and on the 60 minute there is a bearish momentum divergance on the macd. This inverse ETF loses value as energy related stocks go up. So there is some confirmation available and the whole clock work mechanism starting to wind might be getting ready to ” gong” in a new direction.
We are due a pullback heres why i think it will come. This trading Video is a bit long I was tired when creating it.
Here is my take on the SPX. Options Expiration , anything can happen.
Edited: Reading around some of my favourite blogs there are other technicians who feel the same way. Some are calling 1325 which would be a 50% retracement from last high to last low. Check out Coreys take or Dhalseys take from an “Ambush” point of view last Thursday.
Also i called the 1200 touch and go a shooting star when it should be called a hammer.
Todays price action ( while not yet confirmed by volume) in Gold has had me both glad to flatten the position profitably and extra glad to have locked and reloaded yesterday
Edited to add: I got taken out on an intraday spike at 96.50 on GLD on the 60% left only to watch it roll over. Still the price action doesnt fit the original plan. I intend to re assess the TA and see if another entry is warranted.
A real lesson in basics , trade what is happening , not what you expect. There were several tools available to me to tell me I was making a mistake if I had only looked. The one tool i did use was a stop so my mistake isnt sometime im sweating it over. Hopefully somebody benefits from mine and I dont do it again.
When i started out my trade management consisted of ” how much money can i make “. Aside from all the other pitfalls to such a strategy it also meant I was buy and hold or short and hold the entire position and pick the magic day for exit ( which never produced 100% potential profit ) . Today I tried lock and reload. I wanted to lock in profit and also stay 100% in the trade as opposed to scaling out. The idea was in this case to cover a portion of my short and to look for another shorting opportunity. I end up risking a portion of the profit already made so my confidence in the trend will give me an idea of what percentage to trade in the first place. At this point I admit I do not have a formula for working that out.
So, it hasnt played out like I expected , will it ever ? Today I entered gold short with a smaller than planned position size , given I was readjusting quickly. Things dont add up entirely , dollar down and Gold down but at the same time selling pressure arrived today when Bernanke started to mention in Fed speak that he may have to raise rates.
Naturally I am skeptical of 90% of the ” winning systems ” that arrive in my inbox and they end up straight in the trash folder. One such mail has just arrived from Tradeguider.com proponents of VSA or Volume Spread Analysis. The fans of this system claim it is a method to analyze volume versus price on a candle or series of candles to detect institutional buying or selling. Naturally the email has told me If I attend this seminar I will learn to trade like a pro in 30 minutes , but it also promises an introduction to the principles of VSA which does interest me given the belief has been instilled in me that price and volume are the only thing that matter. Initial research on this way of looking at a chart did intrigue me but I did not have the time to pursue it.
You can find out more here and register here
The online event is at 930am EST tomorrow , the 16th July. People who sign up can get a free book on the subject and attendance is free. When you sign up you also gain access to all previous webcasts.
A basic introduction to Volume Spread Analysis can be found here : Basics of VSA
I think Gold has a little way to go before being ready to short. In fact if the gap up on Monday is not
too big I may take a long for a few days . Corey has a great short term analysis on his blog at Afraid to Trade :: Short Term Gold analysis
