Day Trading Strategy for Crude Oil Inventories News 1030am Wednesday

Today is wacky Wednesday

Wednesday before the Friday of OPEX. Third Friday of every month is options expiration. The Wednesday before that Friday is when traders begin to balance their portfolio ahead of the expiration on Friday

– Large un-expected times of volume
– Large buyers and sellers can make it hard to tell when to get in and when to get out
– Unexpected volume can mask the REAL moves in the market

835am est

– The dollar index is trading sideways
– Very narrow trading range
– Speed is slow
– Average True Range is rising (GOOD)
– Inside trading range (inside the highs and lows from yesterday)
– Resting on trend line support (dollar expected to rise)

o Dollar rises = selling other markets

900am est

– The gold futures market looks like a polar opposite of the dollar
– While the dollar was rising, the gold was falling
– Now both markets are trading sideways looking for more direction.
– Sideways markets are easy to trade

o Buy the lows
o Sell the highs
o Avoid the middle

– Also keep an eye on the trend line as support running right through the center of this trading range.

– Also notice the open space ABOVE the trend line as resistance, so look for a big winning move above that trend line if the price has the strength.

930am EST

– We know the crude oil has inventories at 1030, so we have to be aware of that, change the personality of this market today

– We also see that we are just about to ROLL FORWARD to the next month on crude, so we’re seeing 50% of the volume on the 12-10, and the other 50% on the next month of 01-11

o This is causing lower-than-usual volume on a more risky type of trading day
o Its also wacky Wednesday, which is yet another reason to be aware of our surroundings.

945am est

– The dollar index price alert alarm goes off, dollar is dropping below LOD
– Im looking to BUY the markets I trade with the dollar dropping

o The dollar may now reverse and RISE, which means we need to pay attention

1000am est

– We can FEEL the markets are slow right now
– The dollar just tumbled and we didn’t see any movement on the markets we trade

o Euro broke out to the up-side, so look to buy a pullback

1030am est

– We see crude oil inventories come in low

– We already know that Durable Goods came out low earlier this week,

– This tells us that lack of inventory is NOT due to excessive demand, but rather due to lack of production.

– The majority of the market read this wrong, pushing price to the highs, and giving us a PERFECT trade short off the highs