February 8, 2012
- in Uncategorized by schooloftrade
Day Trading Strategies for Dollar Index , Euro, Crude, Russell and Gold futures
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The James’ Report: Day Trading Strategies for Professional Traders
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Being a trader you must be willing to
learn every day. No trader is the
smartest, and you will never know it all.
Remember that a Jack-of-all-trades is a master of none. Have you mastered anything lately?
learn every day. No trader is the
smartest, and you will never know it all.
Remember that a Jack-of-all-trades is a master of none. Have you mastered anything lately?
***Notes/Observations from around the
world***
world***
–
Japan registers its smallest current account surplus in 15 years
Japan registers its smallest current account surplus in 15 years
–
ECB willing to exchange Greek bonds with EFSF but contingent on the success of
current talks over the new bailout and debt restructuring.
ECB willing to exchange Greek bonds with EFSF but contingent on the success of
current talks over the new bailout and debt restructuring.
–
European shares were up among optimism that Greek debt deals are continuing to
progress. Reports from Greek press noted that the PSI deal is now completed.
The coupon would be 3% to 2020. Greek political leaders are expected to meet
later in the day and are expected to agree on austerity measures. On the other
hand, Greece PM is also meeting individually with ECB, EU and IMF.
European shares were up among optimism that Greek debt deals are continuing to
progress. Reports from Greek press noted that the PSI deal is now completed.
The coupon would be 3% to 2020. Greek political leaders are expected to meet
later in the day and are expected to agree on austerity measures. On the other
hand, Greece PM is also meeting individually with ECB, EU and IMF.
Speakers:
–
Greek press noting that PSI deal was now completed. The average coupon would be
around 3.6% and incur a 50% nominal haircut (as previously speculated).
Bondholders would receive 15% in cash and the rest in a Greek bonds. By Wed
next week they were going to publish the list of 80 Greek bonds that are going
to participate in the PSI plus the loans of the Greek banks.
Greek press noting that PSI deal was now completed. The average coupon would be
around 3.6% and incur a 50% nominal haircut (as previously speculated).
Bondholders would receive 15% in cash and the rest in a Greek bonds. By Wed
next week they were going to publish the list of 80 Greek bonds that are going
to participate in the PSI plus the loans of the Greek banks.
–
EU Commission commented that it was not there yet on Greek deal
EU Commission commented that it was not there yet on Greek deal
–
EFSF’s Frankel commented that it would probably play large role in Greece’s
needs and stated that the PSI deal needed “to be finalized”. Leverage
looked to implement two options.
EFSF’s Frankel commented that it would probably play large role in Greece’s
needs and stated that the PSI deal needed “to be finalized”. Leverage
looked to implement two options.
–
EU started 2012 with a budget deficit of €11B
EU started 2012 with a budget deficit of €11B
–
Greece Jan budget revenues were said to decline 7% y/y vs. planned target for
an increase 8.9%. The article noted that value-added tax receipts posted an
18.7% decline y/y. The article went on noting that according to the current
data, the 2012 budget would certainly have to be revised soon, given that the
original estimate for a contraction of 2.8 percent is now raised to 3.5-4
percent of gross domestic product
Greece Jan budget revenues were said to decline 7% y/y vs. planned target for
an increase 8.9%. The article noted that value-added tax receipts posted an
18.7% decline y/y. The article went on noting that according to the current
data, the 2012 budget would certainly have to be revised soon, given that the
original estimate for a contraction of 2.8 percent is now raised to 3.5-4
percent of gross domestic product
–
ECB official Papadia: Seeing some tentative indications of economic
stabilization; can say mission accomplished regarding bank liquidity
ECB official Papadia: Seeing some tentative indications of economic
stabilization; can say mission accomplished regarding bank liquidity
–
Spain said to be planning to tap of the 5.85% Jan 2022 benchmark bond
Spain said to be planning to tap of the 5.85% Jan 2022 benchmark bond
–
S&P offical Hinrichs commented that Germany could not necessary export
fiscal recipe to stressed euro-zone states noting that saving alone was not
enough as growth impulses were mentioned too little. He refuted the concept
that what was good for Germany would also good for Europe
S&P offical Hinrichs commented that Germany could not necessary export
fiscal recipe to stressed euro-zone states noting that saving alone was not
enough as growth impulses were mentioned too little. He refuted the concept
that what was good for Germany would also good for Europe
–
German Bundesbank official Lautenschlaeger reiterated the view that there were
no indications of a credit ‘crunch’ in Germany
German Bundesbank official Lautenschlaeger reiterated the view that there were
no indications of a credit ‘crunch’ in Germany
–
Hungary might begin discussions with IMF by early part of March for the
precautionary credit line
Hungary might begin discussions with IMF by early part of March for the
precautionary credit line
–
Sweden Central Bank (Riksbank) published corporate survey results which saw the
business climate worsening with major risks. Companies were noting of a
downturn in operations and cutback due to weaker economic climate
Sweden Central Bank (Riksbank) published corporate survey results which saw the
business climate worsening with major risks. Companies were noting of a
downturn in operations and cutback due to weaker economic climate
Currencies:
–
The USD was initially softer across the board as risk appetite maintained a
firm footing amid continued hopes that Greece was close to agreeing a deal that
would ensure the next bailout payment.
The USD was initially softer across the board as risk appetite maintained a
firm footing amid continued hopes that Greece was close to agreeing a deal that
would ensure the next bailout payment.
–
The EUR/USD probed the 1.33 neighborhood during the early part of the session
and remained above the pivotal Jan high of 1.3233 and possibly embarking for
mush higher levels if history is a guide. The pair retreated back to its
opening levels of 1.3250 ahead of the NY morning.
The EUR/USD probed the 1.33 neighborhood during the early part of the session
and remained above the pivotal Jan high of 1.3233 and possibly embarking for
mush higher levels if history is a guide. The pair retreated back to its
opening levels of 1.3250 ahead of the NY morning.
Political/
In the Papers:
In the Papers:
–
Former NTMA Chief Michael Somers claimed investors would not buy Irish bonds
due to the poor credit rating per reports in the Irish Independent. In the
radio interview Mr. Somers said Ireland was likely to require a second bailout
since credit rating agencies cut the rating too low to be able to sell bonds to
international investors. Michael Somers was the NTMA chief until 2009, and is
currently the deputy chairman of government owned AIB.
Former NTMA Chief Michael Somers claimed investors would not buy Irish bonds
due to the poor credit rating per reports in the Irish Independent. In the
radio interview Mr. Somers said Ireland was likely to require a second bailout
since credit rating agencies cut the rating too low to be able to sell bonds to
international investors. Michael Somers was the NTMA chief until 2009, and is
currently the deputy chairman of government owned AIB.
–
The German press hinted that Greek losses may cost Germany €25B citing the the
publication’s own calculation, and those of German think tank IfW. With
discussions occurring at the moment, which include a waiver of a portion of the
aid granted to Greece, the losses may increase.
The German press hinted that Greek losses may cost Germany €25B citing the the
publication’s own calculation, and those of German think tank IfW. With
discussions occurring at the moment, which include a waiver of a portion of the
aid granted to Greece, the losses may increase.
–
The Global Head of Sovereign Ratings at Fitch Stringer said that he does not
expect China to provide lots of funds to the EU bailout fund. A large
investment in the EFSF by China could be risky, as the Chinese government could
lose money if the fund is downgraded.
The Global Head of Sovereign Ratings at Fitch Stringer said that he does not
expect China to provide lots of funds to the EU bailout fund. A large
investment in the EFSF by China could be risky, as the Chinese government could
lose money if the fund is downgraded.
–
The Telegraph’s Evans-Pritchard commented on how some EU officials have become
more willing to consider a Greek exit from the EU. Recent comments by EU
Commission Vice President Nellie Kroes said, “It is not the end of the
world if someone leaves the euro zone.” And according to Greece’s EU
commissioner Maria Damanaki, contingency plans are under way for a Greek
withdrawal. Pritchard noted in the article that Greece leaving the EMU is now a
50:50 event.
The Telegraph’s Evans-Pritchard commented on how some EU officials have become
more willing to consider a Greek exit from the EU. Recent comments by EU
Commission Vice President Nellie Kroes said, “It is not the end of the
world if someone leaves the euro zone.” And according to Greece’s EU
commissioner Maria Damanaki, contingency plans are under way for a Greek
withdrawal. Pritchard noted in the article that Greece leaving the EMU is now a
50:50 event.
–
The FT reported that banks increased their collateralized mortgage obligations
(CMO) holdings by $82B in the first 9-months of 2011 to $479B citing FDIC data.
The proportion of CMOs on the balance sheets of banks increased by nearly half
a percentage point to 3.47% over the period. US Treasuries, on the other hand,
declined by 0.17 percentage points between end-2010 and Q3 2011 to 1.25%
($173B). It was added that unlike the subprime collateralized debt obligations
of the financial crisis, the majority of the CMOs being purchased today by
banks are composed made up of mortgages backed by the US government.
The FT reported that banks increased their collateralized mortgage obligations
(CMO) holdings by $82B in the first 9-months of 2011 to $479B citing FDIC data.
The proportion of CMOs on the balance sheets of banks increased by nearly half
a percentage point to 3.47% over the period. US Treasuries, on the other hand,
declined by 0.17 percentage points between end-2010 and Q3 2011 to 1.25%
($173B). It was added that unlike the subprime collateralized debt obligations
of the financial crisis, the majority of the CMOs being purchased today by
banks are composed made up of mortgages backed by the US government.
Germany’s
Finance Minister Schaeuble was said to be mulling the idea of delaying a
majority of new Greek aid to maintain pressure for further austerity measures,
or possibly even prepare for a default. The delay would be applied to the €100B
portion of the aid package. Mr. Schaeuble is seeking to break up the new
bailout aid into two segments. The second €30B portion designated for the Greek
banks that participate in the private sector may be released in days. The
report by FT Deutchland added that Mr. Schaeuble discussed this plan with the
Dutch and Finnish finance minister. FT Deutchland did not specify its sources.
Finance Minister Schaeuble was said to be mulling the idea of delaying a
majority of new Greek aid to maintain pressure for further austerity measures,
or possibly even prepare for a default. The delay would be applied to the €100B
portion of the aid package. Mr. Schaeuble is seeking to break up the new
bailout aid into two segments. The second €30B portion designated for the Greek
banks that participate in the private sector may be released in days. The
report by FT Deutchland added that Mr. Schaeuble discussed this plan with the
Dutch and Finnish finance minister. FT Deutchland did not specify its sources.
–
Troika officials were reported to be seeking individual meetings with Greek
leaders. The officials were likely to hold talks with each of them individually
to obtain their explicit commitment to the measures. The new loan agreement
would be submitted to Parliament on Friday and voted on several days later.
During the European session various Greek party official confirmed that the
Troika draft documents were received. As a reminder, the three Greek coalition
party leaders are due to meet the prime minister on Wednesday to finalize the
measures the government will have to adopt to receive further loans.
Troika officials were reported to be seeking individual meetings with Greek
leaders. The officials were likely to hold talks with each of them individually
to obtain their explicit commitment to the measures. The new loan agreement
would be submitted to Parliament on Friday and voted on several days later.
During the European session various Greek party official confirmed that the
Troika draft documents were received. As a reminder, the three Greek coalition
party leaders are due to meet the prime minister on Wednesday to finalize the
measures the government will have to adopt to receive further loans.
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Today’s Economic News:
Our
day trading
strategies today will depend on the news, and this morning we
finally get some important news to work with as day traders have been waiting
all week for some good news to trade!
day trading
strategies today will depend on the news, and this morning we
finally get some important news to work with as day traders have been waiting
all week for some good news to trade!
We
begin the day this morning with another minor news event out of Canada, Housing
Starts, which we will watch when there is no US news at that time, and since
the largest export in CA is crude oil (no, not hockey players) we want to watch
this report closely when there is nothing else going on this morning at that
time.
begin the day this morning with another minor news event out of Canada, Housing
Starts, which we will watch when there is no US news at that time, and since
the largest export in CA is crude oil (no, not hockey players) we want to watch
this report closely when there is nothing else going on this morning at that
time.
Notice
that housing starts have been very bullish the past 6 months with a few
examples of how the expected news came out much higher than the real report so
we may see more of that today from the CAD.
How do we trade this? We will see
crude oil demand improve with a higher number than expected.
that housing starts have been very bullish the past 6 months with a few
examples of how the expected news came out much higher than the real report so
we may see more of that today from the CAD.
How do we trade this? We will see
crude oil demand improve with a higher number than expected.
 |
| Housing Starts 10 years |
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| Housing Starts 6 months |
We
then move through the 930am EST US Market Open when we will sit on hands around
930am waiting for the market’s to open for the day here in the US.
then move through the 930am EST US Market Open when we will sit on hands around
930am waiting for the market’s to open for the day here in the US.
1030am
EST this morning we have our biggest news of the day, crude oil inventories,
which is always something for us to look forward to. Remember, this report will make it hard to
trade after 1015am EST so sitting on hands after 1015am until after 1035am EST
when the reaction to the news can be seen.
I always have a hard time with this news trying to force trades before
1035am EST so I am always reminding myself to sit on hands until after we see
the first move come and go, and then we can almost always trade in the opposite
direction of the initial move. We will
be watching for inventories to be released at 1030am EST, then we wait for the
DEMAND to be announced moments after and then we can look for opportunities to
trade the reaction.
EST this morning we have our biggest news of the day, crude oil inventories,
which is always something for us to look forward to. Remember, this report will make it hard to
trade after 1015am EST so sitting on hands after 1015am until after 1035am EST
when the reaction to the news can be seen.
I always have a hard time with this news trying to force trades before
1035am EST so I am always reminding myself to sit on hands until after we see
the first move come and go, and then we can almost always trade in the opposite
direction of the initial move. We will
be watching for inventories to be released at 1030am EST, then we wait for the
DEMAND to be announced moments after and then we can look for opportunities to
trade the reaction.
How do we trade
crude oil inventories? Very
patiently. My biggest mistake is getting
in too early and not waiting for the reaction to occur mostly because it’s so
easy to tell what SHOULD happen after the news comes out, but we need to wait
for the market’s reaction and trade that.
And again, remember to wait for the DEMAND figure to be released and
that will tell you how to translate the higher or lower inventories because it
can mean 1 of 2 different things. We
will speak more about this at 1015am EST this morning.
crude oil inventories? Very
patiently. My biggest mistake is getting
in too early and not waiting for the reaction to occur mostly because it’s so
easy to tell what SHOULD happen after the news comes out, but we need to wait
for the market’s reaction and trade that.
And again, remember to wait for the DEMAND figure to be released and
that will tell you how to translate the higher or lower inventories because it
can mean 1 of 2 different things. We
will speak more about this at 1015am EST this morning.
We
can see that the news for crude oil has been nothing but higher inventories,
with lower demand. We’ve seen higher
than expected Non Farm Payrolls and a growing Manufacturing section…could this
be the sign of things to come? Will we
see a higher high in this news today, or will the demand on crude oil return
and we get a much lower reading? We will
see at 1030am EST.
can see that the news for crude oil has been nothing but higher inventories,
with lower demand. We’ve seen higher
than expected Non Farm Payrolls and a growing Manufacturing section…could this
be the sign of things to come? Will we
see a higher high in this news today, or will the demand on crude oil return
and we get a much lower reading? We will
see at 1030am EST.
 |
| Crude Oil Inventories Data |
We
then wrap up our day today with John Williams from the Fed speaking in San Francisco
regarding the recovery. Since this
‘aint’ Big Ben, we don’t really care too much, but we should care if the
markets are slow and sloppy around this time, so watch market personality
closely.
Today
is a Wednesday so I will also remind our guests that we will be moving to
members-only this morning after 1130am EST.
We do private members-only training Monday through Thursday @ 1130am
EST.
is a Wednesday so I will also remind our guests that we will be moving to
members-only this morning after 1130am EST.
We do private members-only training Monday through Thursday @ 1130am
EST.
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