Day traders look for falling jobless claims and early morning trading volume

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The James’ Report: Professional Resources for Professional Traders

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Bank of Japan continues its own currency manipulation

EU Leaders worried about debt crisis, believe Spain and Italy may lead to the fall of the Euro

ECB and BOE leave interest rates unchanged

Crude Oil continues its decline today on less demand across the globe

Money Manager tells its clients to BUY GOLD

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Today’s Economic News:

Day traders will be looking for lower Jobless Claims this morning at 830am in hopes to kick off early morning volume and give us some trading opportunities.

Initial jobless claims for the July 23 week dropped a very sharp 24,000 to 398,000 for the first sub-400,000 reading since early April. In a partial offset, the prior week was revised 4,000 higher to 422,000. The four-week average of 413,750 is down a steep 8,500 in the week for a nearly 15,000 improvement from the month-ago reading. One factor that clouds the latest report and movement ahead is uncertainty about retooling in the auto sector. During summer retooling, timing is always hard to gauge and uncertainty is even greater this year due to ongoing production cutbacks tied to shortages of parts from Japan. Minnesota, where the government remained shut down for most of the week was also a special factor, reflecting the likelihood that the state was hindered in processing claims.

Jobless Claims Weekly Avg

Once we get through 830am we need to keep an eye on the time through the 930am US Market Open and then we have more minor news at 1030am today with Natural Gas Inventories. We will not be trading Nat Gas today in our trade room, so this news event will come and go without much attention or movement in the markets.

After 1030am this morning we expect the markets to begin transition into lunch. We have major news on Friday @ 830am (NFP) and we know traders will be waiting for that so do not expect a Golden Lunch today.

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Looking at the Charts:

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The US Dollar Index is trading in a transitional area at this time, but we can see some easy clues for what to expect this morning. We can see the bull price channel on the 13range chart posted below, and we know there are three distinct possible scenarios this morning which will tell us how to trade with other markets such as Gold, Crude, Russell and Euro.

The dollar correlation will be used this morning if the dollar rises back to re-test the highs, or if it trades sideways with no trend, or if it reverses and breaks the recent swing lows. Either way the dollar moves we will be ready.

One thing to note today: The US Dollar moving lower will move crude oil lower on less demand. The usual correlation with crude oil is not in play this time because the lower USD means less demand in the global marketplace for crude oil…pushing down prices. Historically this is a negative correlation but not at this time in history.

Crude Oil futures continue to tumble this morning on lack of demand across the globe as manufacturing sectors slow, unemployment rates rise, and consumer spending flattens.

We have the horseshoe pattern on the 89rang chart which clearly shows price falling to major support 89.92 which is the same price level we began rising from less than 10 days ago. The key today on crude oil will be to use the bear price channel as our guide, selling retracements with new lower lows, and selling at resistance if price rises up to the channel highs or any levels of resistance overhead. With major support levels below and resistance overhead we will keep an eye on these major levels as profit targets for our short trades and levels to enter short if price rises. We will be looking to buy above the blue trend lines for the horseshow pattern, so keep an eye on strength on the buy side for long trades above 91.27, 93.11, 93.86 and 95.68 this morning, however the higher percentage trades will be to the short side.

Gold Futures are sloppy and sideways after pushing new highs when major money managers were heard telling clients to buy gold. (are they serious? At the highs? Yikes.) Day traders know better than to buy these highs today, so we will wait for major pullbacks to key support levels for buying opportunities, its much more effective at achieving a better entry price and more profit per trade.

You can see we had one buying opportunity overnight on the 89range chart posted below, and we will be staying away from the highs today again on gold, looking to buy pullbacks or buy at support levels of 61.9, 59.1, 54.3, 34.6, 18.8, etc on the way down. We also know that selling the highs will be an effective trading strategy, however its been very sloppy at the highs and we dont see the highs being the most safe way to trade our risk capital at this time, so beware the price action stinks at those highs, so lets be patient…we will get our time to short this commodity in the near future and all this patience will pay off.

Euro Futures are trading in a very similar spot from Wednesday, assumedly waiting on news from Friday and the US Dollar Index to start moving in one major direction or the other. The Euro is pretty easy to plan for today, we are in the narrow price wedge (just below it now) and we see major support below us and resistance above us we can use for trading opportunities. We have a bull price channel so think of the buying opportunities as higher percentage today, which means if price drops to support levels we look to buy 4130, 4115, 4085 and so forth as price drops. If price rises i will look to sell resistance overhead first, however, will be looking for that resistance to break, turn into support, and then looking to buy pullbacks above those resistance levels (which turn into support) above 4355, 4458, 4515, and 4654.

The key on the Euro today will be patience to wait for price to come to our levels, so watch your 89range chart and focus on those levels to wait for.