Sunday, April 28, 2013

Update for the week of April 22nd to April 26th, 2013

Welcome back to CRI's ongoing Crude Oil Day Trading Blog. 

After taking a month off from writing this blog I thought it was about time to update it.

Price analysis you see (first chart & commentary) is CLM3, for the week of April 22nd to April 26th, 2013. Each trading day (time permitting) a 15 minute chart is added and trades for that day are analyzed:
Market Overview: 04/26/13: As the US Dollar continues to resolve around the important 83-84 level few new commodity market trends have been established over the past week's trade. As the month of May approaches we can clearly see the market shifting out of a 'fall/winter' stance and into a 'spring/summer' one. Equity markets have had substantial seasonal rallies, commodities and commodity currencies are failing and interest rates appear to be bottoming. These are all hallmarks of a typical seasonal peak and this is exactly the time of year it is supposed to happen. So ironically enough, while some price action may seem a bit chaotic at the present, things are actually quite normal...

Weekly highlight: The long consolidation between $89 and $98 resolved itself bearishly two weeks ago and the market spent the past week trying to recapture that range. On the heals of a relatively benign inventory report, potential escalation of Western involvement within Syria and numerous terrorist threats (some real and some not so) price raced back up to the 50% level of the sell off and then consolidated into the weekend. Given the seasonal nature of the energy market and the Commercial's current net bearish stance,  I am looking for the market to run into some serious resistance above $94.00. Having said that, once on the other side of this seasonal window (mid June) I shall be looking for the Large Institutions to get paid as they have remained net long (currently at about a 4:1 basis) for some time now as price has either gone sideways or higher over the past couple quarters. Not surprisingly, it would seem $100.00/barrel is our collective 'line in the sand' for the resumption of the previous bull market.

Trading Strategy (1 week):
Initially, I will be looking for a test of Friday's highs. Should those highs be taken out then I shall look for an ultimate move up to fill the gap at the top of the recent Daily trading range. If Thursday's highs prove too much of a barrier, I shall be looking for a test of the 50% level (on the 2 hour chart) and then an ultimate move down into the OTE Long Sweet Spot. A move down into that area ought to represent an interesting long trade location.
 
Revised trading plan with short term filter: 
I have spent the past month studying the 5m chart in detail. I have found that trend line breaks at VolProfile pivots are good entries. So in conjunction with both my Time Frame setups (5AM, 6AM, 7AM & 8:30AM pst) I will use my BoT signals (15m & 1hr chart agreement on trend) to generate directional signals. I will then refer to the 5m chart to take positions. This means I may not take each time frame setup and must remain vigilant throughout the entire trading day as these trend line breaks can happen at any time.
 
Mental State Review:
I have been taking it very slowly of late in my Crude Oil day trading (I havn't even posted a note to this blog in over a month). I have created an 'algo' that identifies option positions where the market pays you to take a position. It has been very hard for me to stomach the kind of risk one has to take trading futures in the face of almost no risk option trades. It has been interesting to see how my internal reaction has been to distance myself from 'risky' futures trading as I watch this new algo go to work. Anything one does in the market should be 'fun'. If it isn't then work becomes very unattractive on a daily basis. I have found the margin of error in trading Crude Oil Futures contracts is so small that many days it just isn't fun and almost seems like a perpetual trap...

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/