CRI's DayTrading

Sunday, October 28, 2012

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/

Sunday, October 21, 2012

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....

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!

Sunday, October 7, 2012

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.

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/

Sunday, September 30, 2012

CLX12 - Update for September 28th, 2012

Welcome back to CRI's ongoing Crude Oil Day Trading Blog. Price analysis you see is CLX12, for the week of September 28th, 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. 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 a bit of a consolidation and then another push lower. The latest push confirmed a rather nasty daily bear ab=cd pattern suggesting that the bears are firmly in control for the time being.

Trading Strategy (1 month): This past week saw further price consolidation with a now confirmed (and very steap) bearish ab=cd price pattern working. 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 of 84.07 has been hit.

Mental State Review: I was and continue to be frustrated at inability to get into a position at 1hr/4hr turning points and hold on. I am currently a good 'scratch' trader (meaning I manage risk well and am consistently marginally profitable). The question is, how do I take the next step? I am determined and focused, it is just a question of getting the process down and continually repeating the same thing. I often find I drift and this gets me into danger. Less drifty....more focusy

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: 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/

Sunday, September 23, 2012

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/

Sunday, September 16, 2012

CLV12 - Update for September 14th, 2012

Price analysis for the week of September 14th, 2012:

Market Overview: QE3 has hit the US dollar index with vengeance. As a result, most commodity prices appreciated over the past sessions with Crude Oil being no exception. As we approach the highly anticipated November US Presidential elections it appears a bit of a 'blow-off' top seems to be building. One can only ponder at what lays ahead of us once on the other side of that event. Should the political landscape be little changed come the end of November, the 'fiscal cliff' will be fast approaching and what may appear as prudent austerity may lead us all into outright depression. it is little wonder to this market prognosticator that the US Fed is trying to front load the economy in anticipation of such an event...

Weekly highlight: This past week saw a breakout through the high end of our recent trading range (97.70 area) and a subsequent move up above the psychologically significant BFRN (big fat round number) of $100.00. Considering the key weekly low of $100.68 was not breached and we settled the week back below $100.00, a test of the recent trading range breakout area (again the 97.70 area) ought to be tested over the short term.

Trading Strategy (1 month): As has been the case for a few months now, the daily chart continues to point higher so my bias remains to the upside. As well as the existing bull ab=cd target of $102.50, the breakout through 98.29 suggests we have another bullish ab=cd target of $105.04 to work with going forward. Consider too the pending US elections in early November and it is tough for me to make the argument for a serious correction over the coming few weeks. Pullbacks in my opinion are still buying opportunities.

Trading Plan for this coming week: This past week I felt more comfortable with the process. Use 'OTE' setup 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 follow the process.

Picture everyday my ideal trade....looking for complete washout at or near OTE/HG zones on 1hr/4hr charts.

b1 aoco (-.21/+.41)....If system is 70% accurate. in 10 trades net ret. = 2835 - 645 = +2190.00

Focus for the week: Stick to the trading plan.....do your research, pick your marks to watch for and act accordingly at those marks...stick to the plan.

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/

Sunday, September 9, 2012

CLV12 - Update for September 7th, 2012

Price analysis for the week of September 7th, 2012:

Market Overview:The little ones are back at school, vacation cottages are closed up and the regular work routine is in the process of re-establishing itself. This transitional process can (and often is) met with some extreme volatility as many different market participants come together all at once. Indeed, this past week saw at least two gut wrenching stop runs only to quickly reverse and move just as violently in the opposite direction. For those nimble enough to take advantage - congrats, I am still in the process of building out my process and unfortunately (like many others) got sucked up into the 'stop running' machine. Looking back over the past week's chart, I am not as sanquine as I was on Friday afternoon as I realise now many other people must have gotten beaten up too in this directionless volatility.

Weekly highlight: One I would rather forget. While losses themselves were not large, profits were little and personal frustrations showed through the end of the trading week. It is easy to get upset if one trades for a living and we go through periods that just don't make sense. Until we resolve this current trading range ($93 to $98) I think it best to trade one lots and be very conservative....bottom picking can be very costly.

Trading Strategy (1 month): The daily chart continues to point higher and there are still some valid upside targets yet to be hit. So with that said, last post's comments seem to still hold true, I am leaning towards higher, not lower prices. New upside objectives include a small daily bull ab=cd (target of 99.74) as well as a gap that ought to be filled at 99.53. Lastly, we do have a rather noticeable weekly bullish ab=cd currently working which in itself suggests prices want to eventually move towards the 102.50 area (which happens to correspond with the same level as the massive daily bull ab=cd, 102.54).

Trading Plan for this coming week: I am rather disappointed in myself in that I strayed from the trading plan over this past week and trading performance suffered. So like my previous post, my trading plan for the coming week should be as follows: Use 'OTE' setup to identify buying and selling opportunities at key support/resistance levels on the 60m chart outlined above.

Picture everyday my ideal trade....looking for complete washout at or near OTE/HG zones on 1hr/4hr charts.

b1 aoco (-.21/+.41)....If system is 70% accurate. in 10 trades net ret. = 2835 - 645 = +2190.00

Focus for the week: Stick to the trading plan.....do your research, pick your marks to watch for and act accordingly at those marks...stick to the plan.

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/