European banks under stress & Feds Bernanke in the Hot Seat before Joint Economic Committee

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The James’ Report: Professional Resources for Professional Traders

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– Crude oil futures trading at the PLOD in what we call an outside day transition. Below 75.92 we sell retracements, above 75.92 we’re buying up to 77.00 easily.

– Gold futures failed to break the PHOD earlier this morning and dropped back into Monday’s trading range. Inside day, avoid the middle of the range and sell the highs and buy the lows/support when inside day.

– Euro currency futures tumble this morning after news comes out furthering fears of the crisis in the euro zone banks. Outside day, below the PLOD, selling retracements with new lower lows, at the same time with this big drop I’m looking for the price reversal to retrace back up into this zone around 1.3380.

– Mini-Russell Futures trades inside day, just barely above the PLOD and just above the big round number of 600.00 which is a psychological level considering we were just down around 620 area about a month ago. Is this one big sideways range? Or are we going to keep tumbling? Selling retracements below the PLOD 601.8

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Around the Globe this morning

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– Euro-Zone Leaders delay Greek loan disbursement

– RBA leaves interest rates unchanged and AUD hits 1- year low

– Finland: Collateral agreement reached with collateral available for all euro countries in principle.

– Belgium bank Dexia slumped over 30% in early trading before verbal support from both Belgium and France gov’t officials

– Deutsche Bank issuew Q3 profit warning

– European shares continued to slide for the third day on Greek crisis. Goldman Sachs analysts lowered 2012 growth in Europe to 3.5% vs 4.2% prior anticipating a mild recession in the region and a decline of 10% in profits in 2012.

– The fundamental picture for Europe appeared just as bleak as the morning began as S&P once again cuts its Euro Zone GDP growth outlook and stated that Europe faced a rising risk of double-dip recession

– The demand for tail-risk hedge funds is rising per reports in the FT. These types of funds seek to profit from low probability events and dramatic market moves.

– Investors are concerned about the outlook for European banks, fearing that the worst is yet to come. Banks continue to play down market concerns despite these investor worries.

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Today’s Economic News:

Day traders will have another slower start to the morning today with no major news ahead of the US Open at 930am, then followed by a much-anticipated testimony by Ben Bernanke in front of the JEC.

We begin our day with the 930am US Open, then followed by Ben Bernanke in from of the Joint Economic Committee, and Factory Orders at 10am. Whenever we lack news before 930am I need to keep that in mind to stay patient before we get some decent market personality. We may see things really slow down around 10am, or they may get too fast and whippy, time will tell, and we will be reading tape, looking for clues to market personality around 955am EST this morning.

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Looking at the Charts:

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Our three price structures on euro currency futures :

– Outside Day

– Bear Price Channel

– Sideways Range at the lows

Outside day tells me to expect the breakouts, however, we are well-below the PLOD and our 2nd clue is the lows of the bear price channel will be a great spot for a reversal.

Sideways range at the lows tells me WHERE to look for the price reversal, above the resistance overhead.

If price rises I’m going to sell the resistance overhead at 1.3224 and 3230. If we break above those resistance levels I will then buy pullbacks because we are triggering the 2step long position off these lows.

As price keeps rising I will take profit at 1.3282 which is the next level of resistance, and then look at what price does from there. If price keeps going I will re-enter my long position with a pullback above 3282 and look to hold that position into the 1.3353 resistance.

If price falls I will buy support at 1.3142 the channel lows, and then if we keep making new lower lows I will be very careful not to over-trade short at the lows of the bear channel. As price drops I would rather be a buyer than a seller at the lows of a bear channel.