CLX12 - Update for September 21st, 2012

Price analysis for the week of September 21st, 2012:
Roll has begun and we are now in November Crude (CLX12)

Writer's note: While I sincerely hope that some, if not all of the information I post on this blog is helpful to you in your trading experience, the reader should be aware that I do this blog as much for myself as I do it for the public. This is a learning experience and I am going to make a lot of mistakes along the way....

Market Overview:  The much anticipated November US Presidential election is 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 was dominated by sellers as price failed to hold onto $100/barrel to begin  the week and ultimately ended near $93.00. The exhausted move up through $100 was a trap. As a result of the breakdown through the previous key lows ($94.28) bullish ab=cd targets have been negated.

Trading Strategy (1 month): The fact that the market tried to push through $100/barrel then failed and broke back below the recent significant lows suggests the bull has run out of steam. Considering the proximity of the daily 50% level I won't be looking for too much further on the downside before a serious test of the $95.00 to $100.00 area ought to come. In short, I shall be looking for a test of the 60m 50% level ($95.84) before looking for a further move to the daily 50% level ($89.73).

Mental State Review: This past week was very tough for me as I couldn't wrap my head around the dramatic mid week price fall. I have a general rule to stop trading when a market goes 'fast' and indeed, practice account trades around that event turned out to be consistent loosers (to the tune of several thousand dollars!). Because of minimum trading day requirements by TsT (more on them here) I forced myself to attempt to trade my 'combine' account on Friday (which in itself couldn't have been a worse time for me to trade as it was a triple witching day) and it lead to more dramatic losses (-$450). I was very upset at myself and how I approached the market in general. I am concerned about my recent over-trading in the practice account (and the laissez-faire attitude it built in me about Sim losses). This definitely spilled over into my combine trading and thank heavens I stopped the run away train before it did too much damage. What I find interesting is that when I asked the resident psychologist for his suggestions (Dr. M.) about how to get back on track with my trading plan, his response was to come up with a new trading plan....I'm not quite sure what to make of that advise but have taken it under considerations.

I am going to be working with a new trading strategy based off the 5m chart (as some have suggested I ought to spend more time concentrating on that as apposed to larger time frames to be a successful 'day-trader'). While I am still working out the kinks I shall remain mute on it. Given my peer's feedback regarding my recent failings (of which I asked for their opinions) the one thing that remains clear to me is that this is still a work in progress....

Trading Plan for this coming week: Given the current volatility, I shall be reluctant to get too aggressive until a new trading range has been established. Having said that, I shall be 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/1m for OTE entry points (and new 5m reversal bar entry signals) and follow the trade process.

Picture everyday my ideal trade....looking for momentum divergences at or near OTE/HG zones on 1hr/4hr charts; tight reversal, clean OTE entry 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....

Focus for the week: lets get back to the plan, it works but it takes discipline...

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/