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September 28th, 2018 Newsletter

Day Trading Crude Oil Futures Techniques along with Unleaded Gasoline Outlook

September 28th, 2018 - Issue #938

In This Issue

1. Trading 202: Day Trading Crude Oil Futures Techniques
2. Hot Market Report: Unleaded Gasoline Making Another Leg Higher
3. Economic Calendar

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1. Day Trading Commodities with Crude Oil Futures


Crude Oil Futures volatility offers a "different market personality" than stock index futures. Here is some of the things you need to know about day trading crude oil futures:

By: Ilan Levy-Mayer, Cannon Trading Commodities Broker & VP

Crude Oil is one of MY favorite futures market for day trading. Before I dive in and share with you how the volatility in crude oil fits my risk tolerance for day trading and provide a couple of chart examples, we should review some of the specifications of Crude Oil Futures.  

Crude Oil Futures have monthly expiration. So each month we trade a different contract month, so one needs to know when is the first notice day and last trading day for crude oil futures in order to always make sure we are trading the proper month with the most liquidity and avoid any chance of getting into delivery situation.

Next is the contract size. Crude Oil futures are based on 1000 barrels. To be honest from a day trading perspective all I care is that each tick or 1 cent fluctuation is $10 against me or in my favor per contract. That means that a move from 92.94 to 92.74 = $200.

Another factor is trading hours. At the time I am sharing my thoughts with you, April 8th 2013, crude oil futures trade on the CME Globex platform and trade from 5 PM CDT until the next day at 4 PM CDT. That is 23 of straight trading hours. I definitely don't recommend day trading this market 23 hours...but it is good to know the trading hours.

Volume in crude oil futures is pretty good to trade in my opinion. Averaging about 300,000 contracts per day.

One last pointer to touch on is the API (American Petroleum Institute) report that normally comes out Wednesday at 9:30 CDT (on short weeks, holidays etc. , this report will be pushed to Thursday at 10 AM CDT). I tell my clients that this report is way too volatile and I like to be out 5 minutes before and not resume trading 5 minutes until after the report comes out. This report by itself deserves a writing but on short, the report provides information on how our stock pile is doing ( = supply/demand)  and the market will move based on the numbers versus what was expected. Again as a day trader, your main job is to know about this report, when it comes out and in my opinion stay out of the market during this time..Fill out the form below to read the full article.

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Day Trading Crude Oil

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2. Hot Market Report: Unleaded Gasoline Making Another Leg Higher

By Ilan Levy-Mayer, VP

Click on image below to enlarge

Unleaded Gasoline futures; Unleaded Gasoline is part of the enery sector along with "it's" brothers crude oil and heating oil and cousin, natural gas. All traded on the NYMEX/GLOBEX exchange.

Daily chart from this morning, (Sept. 28th 2018). Note we approaching major resistance at 212.68. A blue, slanted arrow from a few days ago, suggests we may have another leg up in a bulish trending market. Elliot Wave counts marks possible next waves both if we contniue higher (-3-)or if the market experience profit taking (-4-) This chart was prepared using CQG Q Trader software, which you can demo for 14 days with realtime data.
To access a free trial to the ALGOS shown in the chart along with other tools, visit and sign up for a free trial for 21 days with real-time data.

From the fundamental perspective, the situation with Iran along with Trump and OPEC butting heads helps volatility and makes this market a bit "jumpy". If you are a longer term trader, try to avoid the intraday noise. While driving season is over and we are now entering the "heating season", which is more applicable for heating oil, the overall energy sector is currently strong.


Unleaded Gasoline Specs
Hours ( Central Time): 5:00 PM previous day to 4:00 PM next day.
Margins: ( as of the date of this newsletter) $3100 initial, $2800 Maint.
Contract Size: 42,000 galons
Point Value: full point = $420 ( Example: 218.80 to 219.80 ). Min fluctuation is 0.01 = $4.2 ( Example: 218.80 to 218.81) Settlement: Deliverable, FND is last business day preceding the contract month
Months: Monthly, every month
Weekly Options: YES
Some of the basic fundamentals to keep in mind when you are considering a trade in the Unleaded Gasoline as well as other energies:
1. Primary driver of Unleaded prices is the price of Crude Oil
2. Dates and times of important reports. Namely, Tuesday afternoon report (API) and the DOE report on Wednesday mornings at 10:30 Am EST
3. Weather and Seasonality
4. Number of Refineries operating and any major outages of refineries
5. US and Global supply and demand picture

Our brokers here at Cannon will be happy to chat about the Unleaded market, other energies, other futures, options, futures spreads and much more! Feel free to contact us at any time.

3. Economic Calendar

Source: Moore Research Center, Inc.

Date Reports Expiration & Notice Dates
09/28
Fri
7:30 AM CDT - PCE Prices(Aug)
7:30 AM CDT - PCE Prices-Core(Aug)
7:30 AM CDT - Personal Income & Spending(Aug)
8:45 AM CDT - Chicago PMI(Sep)
9:00 AM CDT - Michigan Sentiment-Final(Sep)
11:00 AM CDT - Grain Stocks
11:00 AM CDT - Small Grains Summary
FN: Oct Copper(CMX)
Oct Gold & Silver(CMX)
Oct Platinum & Palladium(NYM)
Oct Soymeal & Soyoil(CBT)
LT: Sep 2,5 Year Notes(CBT)
Sep Fed Funds(CME)
Oct RBOB & ULSD(NYM)
Oct Sugar-11(ICE)
Sep Fed Funds Options(CME)
Oct Lumber Options(CME)
10/01
Mon
9:00 AM CDT - Construction Spending(Aug)
9:00 AM CDT - ISM Index(Sep)
2:00 PM CDT - Cotton System
2:00 PM CDT - Fats & Oils
2:00 PM CDT - Grain Crushings
FN: Oct Sugar-11(ICE)
 
 
 
10/02
Tue
1:00 PM CDT - Auto & Truck Sales(Sep)
3:30 PM CDT - API Energy Stocks
 
 
FN: Oct RBOB & ULSD(NYM)
LT: Sep Butter(CME)
Sep Milk(CME)
Sep Butter Options(CME)
Sep Milk Options(CME)
10/03
Wed
6:00 AM CDT - MBA Mortgage Purchase Index
7:15 AM CDT - ADP Employment Change(Sep)
9:00 AM CDT - ISM Services(Sep)
9:30 AM CDT - EIA Petroleum Status Report
2:00 PM CDT - Dairy Products Sales

 
 
 
10/04
Thu
7:30 AM CDT - USDA Weekly Export Sales
7:30 AM CDT - Initial Claims-Weekly
9:00 AM CDT - Factory Orders(Aug)
9:30 AM CDT - EIA Natural Gas Report
3:30 PM CDT - Money Supply

 
 
 
10/05
Fri
7:30 AM CDT - Ave Workweek & Hourly Earnings(Sep)
7:30 AM CDT - Nonfarm Payrolls(Sep)
7:30 AM CDT - Trade Balance(Aug)
7:30 AM CDT - Unemployment Rate(Sep)
2:00 PM CDT - Consumer Credit(Aug)
LT: Oct Canadian Dollar Options(CME)
Oct Currencies Options(CME)
Oct Mx Peso Options(CME)
Oct Us Dollar Index Options(ICE)
Oct Live Cattle Options(CME)
Nov Cocoa Options(ICE)
10/08
Mon
COLUMBUS DAY
 
 
 
FN: Oct Live Cattle(CME)
LT: Nov Sugar-16(ICE)

 
10/09
Tue

 
 
 
FN: Nov Sugar-16(ICE)
LT: Oct Cotton(NYM)
 
 
10/10
Wed
6:00 AM CDT - MBA Mortgage Index
7:30 AM CDT - Core PPI & PPI(Sep)
9:00 AM CDT - Wholesale Inventories(Aug)
3:30 PM CDT - API Energy Stocks

 
 
 
10/11
Thu
7:30 AM CDT - Initial Claims-Weekly
7:30 AM CDT - Core CPI & CPI(Sep)
9:00 AM CDT - JOLTS-Job Openings(Aug)
9:30 AM CDT - EIA Natural Gas Report
10:00 AM CDT - EIA Petroleum Status Report
11:00 AM CDT - WASDE Report & Crop Production
2:00 PM CDT - Dairy Products Sales
3:30 PM CDT - Money Supply

 
 
 
FN=First Notice, OE=Option Expiration, LT=Last Trade

Disclaimer: This calendar is compiled from sources believed to be reliable. Moore Research Center, Inc. assumes no responsibility for any errors or omissions. It is meant as an alert to events that may affect trading strategies and is not necessarily complete. The release dates for certain economic reports may have been rescheduled.

* Please note that the information contained in this letter is intended for clients, prospective clients, and audiences who have a basic understanding, familiarity, and interest in the futures markets.

** The material contained in this letter is of opinion only and does not guarantee any profits. These are risky markets and only risk capital should be used. Past performances are not necessarily indicative of future results.

*** This is not a solicitation of any order to buy or sell, but a current market view provided by Cannon Trading Inc. Any statement of facts herein contained are derived from sources believed to be reliable, but are not guaranteed as to accuracy, nor they purport to be complete. No responsibility is assumed with respect to any such statement or with respect to any expression of opinion herein contained. Readers are urged to exercise their own judgment in trading!

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