This Blog provides futures market outlook for different commodities and futures trading markets, mostly stock index futures, as well as support and resistance levels for Crude Oil futures, Gold futures, Euro currency and others. At times the daily trading blog will include educational information about different aspects of commodity and futures trading.
I may sound like I keep repeating myself but make sure you are adapting to the different market conditions we are seeing compared to a month ago or so.
There is much higher volatility, speed of price change and wider ranges.
Moves today in bonds, S&P, Russell, Crude, Gold and many other markets were very sharp, fast and powerful. This obviously presents both risks and opportunities but for newcomers – mostly risk.
This is a good day to keep notes on in your journal. What caused the price action? What type of “bands” did the market have? How did you do as a trader? What can you do better and learn from for the next “Wild, crazy” day which may even happen tomorrow?
The biggest advice I can give on days like today is to make sure you don’t lose it….make sure you know what your daily loss limit is and step away if it gets triggered. This is one of those days where I have seen traders blow their whole account up…..So just make sure you live to trade another day!
I may sound like a broken record but make sure you are adapting to the different market conditions we are seeing compare to a month ago or so.
Much higher volatility, speed of price change and wider ranges.
I wrote the following outlook for ForexMagnates.com and sharing it with you as well, again it is just one man’s opinion….mine:
Did AliBaba Mark Stock Market Highs??
Many people have commented about the stock market run of the last few years, its widely perceived “Quantitative Easing” connection, and much more. Some of these people are smarter and more knowledgeable than me when it comes to economics but then again, sometimes the stock market does not react to economics, intuitive correlations, or “brains” but does what it wants to do…..
If you were one of the bulls who bought any significant correction in the past 5-6 years you would have done well, as QE just fueled the stock market into new highs.
To me the big question is: Does this represent the highs for the next few years?
Statistically the right answer is no. There is a higher probability that stocks will recover and make new highs than the chance that this may be the high for the next few months/ few years.
However, in my opinion, there is a much larger room for profits on the downside than there is going long at these levels, especially considering that the FED is unwinding QE.
Volatility shook global markets this week, severely testing the long equity rally. Wednesday saw the biggest one-day gain of the year in the S&P500 and Thursday marked the biggest decline in the index since April. The VIX volatility index moved sharply higher, topping 20 for the first time since February. The downside ramp got underway thanks to disastrous German industrial data published on Monday and Tuesday. German August factory orders data declined 5.7% m/m (the biggest m/m drop since early 2009), led lower by a big slide in overseas orders. German August industrial production declined 4% m/m, much more than expected. In addition, the IMF cut its 2014 global growth forecast to from +3.4% to +3.3% and its 2015 forecast from +4.0% to +3.8%. The DJIA and S&P500 were down 2.5% a piece by Wednesday morning, and participants read deeply between the lines of the FOMC minutes to uncover the possibility of the Fed holding off on rate hikes longer, driving a sharp reversal. The sugar high didn’t last, and markets closed at the lows of the week (or much lower, in the case of the Nasdaq, which is right at its 200-day moving average). Ebola fear spread to new corners of the globe all week – the first confirmed transmission of the virus outside of Africa struck a nurse in Madrid – but nearly all the reports were false alarms. For the week, the DJIA dropped 2.7%, the S&P500 fell 3.1% and the Nasdaq lost 4.5%, the worst week for the tech index since May 2012. After the cash close on Friday, S&P futures saw another spike in volatility around the 1900 mark, rallying 6 handles before falling nearly 10 points in the final minute of index futures trade to close on the lows, portending more volatility in stock trading Monday, when the bond market is closed for Columbus Day. Continue reading “Futures News, Economic Reports & Levels 10.14.2014”
Today’s action in stock indices was quite impressive! The volatility we are now seeing is so different than what we witnessed 2 months ago it’s almost like we are trading a completely different market!
We had almost a 50 point range on the SP today!! Much different than the 8-12 points range we saw couple months back….This calls for you as a trader to adjust, researched and be aware of the market conditions you are trading in.
The market is moving much faster. I was watching the DOM today off and on and the speed of the moves was extreme.
When volatility expands I have the following tips:
Reduce trading size
Be extra picky = no trade is better than a bad trade
Choose entry points wisely. Look at longer time frame support and resistance for entry. Take the approach of entering at points where you normally would have placed protective stops. Example, trader x looking to go long the mini SP at 1925.00 with a stop at 1919.00, instead “stretch the price bands” due to volatility and place an entry order to buy at 1919.75 and place a stop a few points below in this hypothetical example.
Consider using automated stops and limits attached to your entry order as the market can move very fast at times.
Another two markets I like to touch on when it comes to “other markets to daytrade beside the mini SP 500” are Crude Oil Futures and Gold futures.
More than a few similarities between the two markets.
They are both volatile, can move VERY fast. I have seen some very large moves happen in matter of minutes if not seconds. The “fear & greed” factor really plays a role in these specific two markets.
Both have active trading hours starting with Far East trading around 10 PM est all the way to the next morning until about 3 PM est. Good volume generally speaking but not close to the mini SP or ten year notes. So you may see some slippage on stops but the volume is more than enough to trade size.
Each tick on gold is $10, so every dollar move =$100 against you or in your favor. Crude is similar, each tick = $10. One full $1 move = $1000.
True to my Monday tradition, I am sharing some of the news/ factors affecting the markets this week:TradeTheNews.com Weekly Market Update: Markets Shake Off Ebola, Hong Kong Flu, and ECB’s Dubious Prescription
The contrast between US economic strength and Europe’s deflationary headache got even stronger this week. On Thursday, ECB President Draghi outlined his asset purchase plan but left investors with the impression that the program would be too little to beat deflation. Draghi said the ECB’s balance sheet would grow back toward €3 trillion compared to near €2 trillion today, suggesting that the potential universe of covered bond and ABS purchases is up to €1 trillion. Meanwhile, the September non-farm payrolls was +248K complemented by a combined 69K in upward revisions to July and August data. The unemployment rate declined from 6.1% in August to 5.9%, the lowest level since July 2008. The only sour notes were that wage growth was still pretty weak and labor force participation slipped lower. In China, the Occupy Central protest movement took over downtown Hong Kong, driving big sequential declines on the Hang Seng early in the week. The bourse closed for two days of holidays, fell 2% in early trading on Friday and then closed higher. There are real fears that Beijing will not tolerate much more unrest in the city. For the week, the DJIA slipped 0.6%, the S&P500 lost 0.8% and the Nasdaq fell 0.8%. Continue reading “Market News, Futures Level & Economic Reports 10.07.2014”
We started a trial for a new squawk box service here at Cannon and I must say I was impressed enough to share with you an example of the wrap up email I received as well as a link to their services:
We started October with a bearish statement on stock indices and being October that may make some bulls even more concerned….Yet it seems that over the past 5 years the bulls were quick to buy any major corrections and following the FED and QE were able to ride the waves up.Well QE is being reduced and job figures may provide the Fed. more confidence to continue with reducing QE. Friday’s monthly reports will be watched closely as well as the X factor – QE in Europe?To be honest I was never much of an in depth fundamental guy as I simply follow too many markets to be an expert on the different fundamentals that move each market, so I try to keep on top of the major news/issues and I rely 80% on charts, especially when it comes to shorter/medium time frames. Continue reading “Heikin-Ashi Mini Russell 2000 chart; Economic Reports & Levels 10.02.2014”
Time sure does tick a bit different in the commodities and futures world….
Some traders know time has passed quickly when it is time to change to the Dec. contract versus the Sept. contract, others may notice it when they think “wow, monthly unemployment is this Friday, time sure flies…” and still other traders, perhaps professionals and money managers notice it when one month ends and another starts and it is time to share monthly results with their clients…..
Either way you look at it, hope October will be a great trading month!
Today I noticed a couple of market behaviors I have noticed in the past and wanted to share with you.
The first is us Bonds trading behavior on the last trading day of the month on the last 15 minutes of the old pit session, i.e. 13:45 to 14:00 central time.
While I did not spend any time trying to predict the direction of the move, I seen it many times, the bonds will make a 10-15 ticks ( 15 tick in bonds = $500 per contract) move during the last 15 minutes as large traders position themselves ahead of months close.
Below is a 15 minute chart of Bonds from today….notice the very tight range all day long until the last 15 minutes….if you go back to the last trading day of the month, you will notice this pattern more often than not. Of course, I leave the important work to you…and that is which way and how can one try to take advantage of it….PS: My trade system below missed entering the short by 1 tick )-:
Custom USA – 30Yr US Treasury Bonds (Globex), Equalized Active 15Min Continuation
The second pattern for you to investigate if interested is the behavior of crude oil futures around “round numbers”. Today was obviously a HUGE move in crude ( down over $3 or $3000 per contract or 3.5%) but notice the 10 seconds chart I am sharing with ( yes, seconds, not minutes…) of what happened when crude broke below 93.00 and 92.00 today…..Once again, the million dollar question, how and can you take advantage of it? Obviously in this case it seems like there were MANY sell stops placed right below the round numbers which resulted in another accelerated move to the down side.
RISK DISCLOSURE: Past results are not necessarily indicative of future results. The risk of loss in futures trading can be substantial, carefully consider the inherent risks of such an investment in light of your financial condition.
