Well welcome back everyone. Rob here with you, as we go ahead and look at Tuesday’s activity, a couple of things to go ahead and note. First things first, from the stock index futures perspective, stock index futures here continue to go ahead and basically kiss their speed lines most of the day today. We were either slightly above, at or at some points below our speed lines on the stock index futures. This left us with a real rough ride on an intraday basis. If you’re a retail trader getting caught up in the middle of that mess, you were not a real happy camper for a great part of this morning here.
What We Were Looking at in the Room Today
Now, our focus in the room tended to be on things such as gold prices which was looking a little bit better. Ultimately, going into the afternoon we were looking for crude oil news and both of these went ahead and had nice moves. As we go ahead and go into tomorrow, we are now basically back above the speed lines on these four stock index futures. The DAX also is in a situation where it is at its speed lines on the daily basis. So, this is very important when you’re trying to figure out a direction on the day and how we’re going to respond from a trading perspective. On my charts, you can see that the DAX is right in the middle of the stock index futures and often the stock index futures and the DAX will travel together. We’re going to be looking now into tomorrow: Do we open up with the stock index futures in the DAX below the speed lines? Then we would certainly be looking more at shorts but if we can hold the speed lines and start pushing back towards the upside then we will certainly be looking at longs.
It sounds pretty simple, and yet where most of the traders get it wrong is when they’ll see… for instance, this morning there was a rally at one point in a couple of stock index futures but I wasn’t quite confident in its follow-through because of situations just like the one you see on my charts at 2:11. What you’ll notice here is on the NASDAQ daily chart is that we may be above both the speed lines right now but you’ll notice that the fast speed line is below the slow speed line. Let’s take a look at what that looks like on my charts at 2:26. When I’m in a situation like that I am going to be very skeptical about longs. Just as if when we go ahead and have a situation where my fast speed line is above my slow speed line and I’m firing off blue and blue and blue on my indicators. By gosh, I better be thinking about long-side trades.
So we see along the way here that these markets have these little pullbacks. What happens is you get some retail traders who are constantly trying to be top-catchers or bottom-catchers to call a top. The problem is that gets some sucked in short only to watch it turn around and rip their heads off. So similar situation over here at 3:11. When I’m below the fast speed lines below the slow speed line, well now I’m going to be concerned that any sort of rally might come right back down crashing on top of people. We actually saw that earlier this morning. Do keep that in mind how that strategy works.
The Stock Index Futures and Crude Oil News for Tomorrow
Going into tomorrow morning I’m going to very clearly looking at where do all four of the stock index futures lay and we’ll take a look at what the DAX as well and see what kind of agreement or disagreement that is going ahead and giving. Two things to note here; gold prices were the key flavor of the morning session and for those of you that get my intraday video updates we put one out for crude oil news for the afternoon. So, as we take a look here at 3:55, I continue to be very bearish on gold prices and looking for shorts this morning and we will continue to do so as we go through this key accumulation and distribution area. There is still plenty of room and opportunity to go.
The real story here is the crude oil news. The thing is, I like it especially as we are down underneath the resistance you see on my charts at 4:25. If we couldn’t break back above this resistance I show at 4:28, I told people I want to be focusing on a short. The key about the short is that we have this rising trend line I point to on my charts at 4:40. That is what I mentioned for the intraday video today that was supposed to be for this afternoon trading session. So as we look at everything, it’s a situation where this market has gone ahead and broken down below that area that led to a nice sell off but there is also a fundamental thing taking place here as well. It’s great when you can combine technical and fundamentals. My work really compliments that.
One thing to keep in mind here is that we’ve had this situation now with this news announcement that the US is to become the top oil producer in 2015. So they are saying we are going to surpass Saudi Arabia and Russia for #1 oil producer. That’s fantastic from a supply and demand perspective to help potentially prices down and also on an oil independence basis there are a lot of pros to that as well from a strategic and military perspective.
Bottom line is, I’m going to be looking for short-side opportunities and seeing how true these inventory number prove to be. Does the US actually become the top oil producer? I’m going to keep an eye on that as it is going to be an ongoing story for the future. So just know that in the back of my head that whenever I find short-side trade set-ups I am going to be more aggressive on those than I will on any long-side trade setups.
Hope that you enjoyed this video and I look forward to seeing you in tomorrow’s video or in the Live Trading Room tomorrow morning.
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