December 7th, 2018 Newsletter

Mini Russell and Stock Indices in Volatile Lower Trading along with Review of Using range Bar Charts

December 7th, 2018 - Issue #946

In This Issue

1. Trading 201: Using tick/Volume charts and Oscillators for Scalping
2. Hot Market Report: Mini Russell leading the rest of stock indices lower...for now...
3. Economic Calendar

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1. Trading 201: Using Tick/Volume charts and Oscillators for Scalping

Using tick charts and oscillators for day-trading (by Ilan Levy-Mayer VP of Cannon Trading and CTA at Levex.net )

I really don't think anyone has found a "perfect way" to day-trade.

Different techniques work well in different market environment.

In this week short educational feature, I will touch on one technique you can add to your trading arsenal. This technique works better on choppy, two sidedway and/or volatile markets. It does NOT work well when the market has a strong trend.

The chart below illustrates a few principals I like:

  1. It uses a tick chart rather than a time chart. I like tick charts ( range bar, volume charts, renko) better when day-trading shorter time frames for the simple reason it already includes a big factor in the market, VOLUME. If you are using a 5 minute chart for example, you may get signals simply because time "has passed" and certain indicators you are using adopt certain values. When using tick charts during periods where there are lots of movement, you won't have to wait until your time frame bar closes to get your signal, volume becomes a bigger more important part of your trading decision.
  2. The other part for this trading approach is to use overbought/ oversold indicators in an attempt to catch exhastion in selling or buying and catch the counter trend move. Sometimes that move will be minor, sometimes it will be a trend reversal and at other times just a little pause in a strong trend....no crystal balls here, just another tool to observe and consider in your trading. In the PDF you will see the same indicators, same market, same time frame BUT using different type of charts.....
More Info

Range Bars Charts

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2. Hot Market Report: Mini Russell leading stock index futures lower

By John Thorpe and Ilan Levy-Mayer, Senior Brokers

Click on image below to enlarge

mini Russell futures;

The e-mini Russell futures contract is the broadest based index in the futures market that offers the kind of liquidity we like. Recently , The RTY was the leader in the recent stock market weakness. It’s contract highs were made a month before the Dow 30, the S&P 500 or the Nasdaq, The Former made it’s highs on September 3rd and the later made their highs on or about October 3rd.

Daily chart from this morning, (Dec. 6th 2018).Notice we made new recent lows on this leg down and my next objective for this market is 1408, IF selling pressure resume. I suspect we will see more than a few up and down days and moves and for volatility to remain high.

Stocks in general have been weak and it seems that the sentiment is now bearish and by that I mean, news and data are more often perceived as bad for the market rather than positive. Compare this to the bullish sentiment we had about 12 months ago...when it was almost exactly the opposite. With stocks being at the high historical prices, even a 2% move translates into quite a bit of $$ move.

The catalyst for the selloff on the third of October appeared to be statements that were made by current Fed Chairman Jerome Powell in an interview he gave with Judy Woodruff of PBS "The really extremely accommodative low interest rates that we needed when the economy was quite weak, we don't need those anymore. They're not appropriate anymore," Powell said. "Interest rates are still accommodative, but we're gradually moving to a place where they will be neutral," he added. "We may go past neutral, but we're a long way from neutral at this point, probably." With Housing numbers weakening, mortgage rates rising, Auto Sales stagnating and the prospect of future rate hikes, the market suddenly reversed course as the glowing outlook of an extended recovery, suddenly had a new and ominous opponent to face, Rising interest rates. Jerome Powell add more fuel, during the conversation, to investors’ fears when he said we are “A long Way” from getting rates to neutral.

This chart was prepared using CQG Q Trader software, which you can demo for 14 days with real time data.
To access a free trial to the ALGOS shown in the chart ( DIAMONDS included) along with other tools, visit and sign up for a free trial for 21 days with real time data.

Mini Russell was trading over at the ICE exchange until a few months ago and came back to the CME ( which I am personally happy about as the ICE exchange has the "chutzpa" to charge traders approx. $120 per month for the real time data!! compare to the CME $5 per month....). The symbol changed from TF to RTY but it is the same contract, mini Russell 2000

The mini Russell has good volume relatively and in my opinion is suitable for both day trading and swing trading. If you are an ES or NQ trader and never traded the RTY, take a look, follow the price action and see if you like this market as another tool to use.

Mini Russell 2000 Futures Specs
Hours: 5:00 PM to 4:00 PM next day PM Central Time
Margins: $3905 initial, $3550 Maint. ( as of the date of this newsletter)
Point Value: full point = $50.00 ( Example: 1480.10-1481.10 ). Min fluctuation is 0.10 = $5.00 ( Example: 1480.10-1480.20) Settlement: Cash on the open of the third Friday of each QUARTER ( June, Sep, Dec, March )
Months: Quarterly cycle, June, Sep, Dec, March. M,U,Z,H
Weekly Options:coming soon
Some of the basic fundamentals to keep in mind when you are considering trading the RTY or other indices for this matter:
1. Longer term view of current market prices
2. Dates and times of important reports. CPI, Housing, employment, FOMC are just some of the reports you need to watch for
3. Earning reports
4. U.S. Fiscal and Monetary Stability

Our brokers here at Cannon will be happy to chat about the MINI Russell market, other indices, 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
12/06
Thu
7:30 AM CST - USDA Weekly Export Sales
7:30 AM CST - Initial Claims-Weekly
7:30 AM CST - Trade Balance(Oct)
9:00 AM CST - Factory Orders(Oct)
9:30 AM CST - EIA Natural Gas Report
3:30 PM CST - Money Supply
LT: Dec Cotton(NYM)
 
 
 
12/07
Fri
7:30 AM CST - Ave Workweek & Hourly Earnings(Nov)
7:30 AM CST - Nonfarm Payrolls(Nov)
7:30 AM CST - Unemployment Rate(Nov)
9:00 AM CST - Wholesale Inventories(Oct)
2:00 PM CST - Consumer Credit(Oct)
LT: Dec Canadian Dollar Options(CME)
Dec Currencies Options(CME)
Dec Live Cattle Options(CME)
Dec Mx Peso Options(CME)
Dec US Dollar Index Options(ICE)
Jan Cocoa Options(ICE)
12/10
Mon
9:00 AM CST - JOLTS-Job Openings(Oct)
 
 
 
FN: Dec Live Cattle(CME)
LT: Jan Sugar-16(ICE)
 
 
12/11
Tue
7:30 AM CST - Core PPI & PPI(Nov)
11:00 AM CST - WASDE Report & Crop Production
3:30 PM CST - API Energy Stocks
FN: Jan Sugar-16(ICE)
 
 
 
12/12
Wed
6:00 AM CST - MBA Mortgage Index
7:30 AM CST - Core CPI & CPI(Nov)
9:30 AM CST - EIA Petroleum Status Report
1:00 PM CST - Treasury Budget(Nov)
2:00 PM CST - Dairy Products Sales

 
 
 
12/13
Thu
7:30 AM CST - USDA Weekly Export Sales
7:30 AM CST - Initial Claims-Weekly
7:30 AM CST - Export(ex-ag) & Import(ex-oil) Prices(Nov)
9:30 AM CST - EIA Natural Gas Report
3:30 PM CST - Money Supply
LT: Dec Nikkei(CME)
Dec Cocoa(ICE)
Dec Nikkei Options(CME)
12/14
Fri
7:30 AM CST - Retail Sales(Nov)
7:30 AM CST - Retail Sales Ex-Auto(Nov)
8:15 AM CST - Capacity Util & Industrial Prod(Nov)
9:00 AM CST - Business Inventories(Oct)
LT: Dec Wheat(CBT)
Dec Corn(CBT)
Dec Oats(CBT)
Dec Soymeal,Soyoil(CBT)
Dec Lean Hogs(CME)
Dec Lean Hogs Options(CME)
Jan Coffee Options(ICE)
Jan Crude Lt Options(NYM)
12/17
Mon
7:30 AM CST - Empire Manufacturing(Dec)
9:00 AM CST - NAHB Housing Market Index(Dec)
11:00 AM CST - NOPA Crush
3:00 PM CST - Net Long-Term TIC Flows(Sep)
LT: Dec Currencies(CME)
Dec Eurodollar(CME)
Dec Mx Peso(CME)
Dec US Dollar(ICE)
Dec Eurodollar Options(CME)
Jan Sugar-11 Options(ICE)
12/18
Tue
7:30 AM CST - Building Permits & Housing Starts(Nov)
3:30 PM CST - API Energy Stocks
 
 
LT: Dec Canadian Dollar(CME)
Dec Coffee(ICE)

 
12/19
Wed
6:00 AM CST - MBA Mortgage Purchase Index
7:30 AM CST - Current Account Balance(Q3)
9:00 AM CST - Existing Home Sales(Nov)
9:30 AM CST - EIA Petroleum Status Report
1:00 PM CST - FOMC Rate Decision(Dec)
2:00 PM CST - Milk Production
2:00 PM CST - National Hop Report
2:00 PM CST - Dairy Product Sales
LT: Dec 10 Year Notes(CBT)
Dec Bonds(CBT)
Jan Crude Lt(NYM)
Jan Platinum Options(NYM)
Jan Palladium Options(NYM)
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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