September 22, 2011
- in Uncategorized by schooloftrade
Traders react to Operation Twist with new lows across all markets; Jobless Claims at 830
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The James’ Report: Professional Resources for Professional Traders
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– Risk aversion across all markets this morning in reaction to the FOMC News at 215 Wednesday
– Crude Oil tumbles to new lows, outside day
– Gold tumbles to new lows, outside day
– Euro makes new lows, outside day
– Mini Russell makes new lows, outside day
– Operation Twist, consists of buying long term treasuries and selling debt of shorter maturity
– Fed says economic outlook remains grim thus equities meet reality
– European bourses down over 4% heading into the NY morning (Asia was down 2-5%)
– European shares slumped following Wall Street and Asian equities after Fed’s pessimistic assessment on the US economic outlook ignited risk aversion.
– Investor George Soros: Current situation in Greece more dangerous than Lehman
– According the US financial press, the ECB may not have the tools required to deal with the new phase of the EU debt crisis.
– Spain is seen by some as the biggest threat to the European banking system
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Today’s Economic News:
Day traders are watching a reaction this morning to the FOMC News yesterday at 215pm EST, so today is expected to be full of surprises, so we will be paying close attention to news coming over the wires this morning.
We begin our day with jobless claims at 830am, followed by leading indicators and home prices at 10:00am. We have a minor Natural Gas Report at 10:30am (which I will not be watching) and then we head into our transition into lunch around 1130am est today.
We should have some good volume early this morning, and the reaction to this ‘operation twist’ will certainly be on everyone’s radar, so we expect a busy day.
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Looking at the Charts:
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Euro Futures:
Three price structures on the faster timeframe…
Bear Channel
Bear Wedge
Outside Day
My plan of attack will be to look for the new lows to exhaust, waiting for a price reversal to take us back up into the range above us.
This strategy only goes so far. If we keep seeing new lower lows, I will be selling retracements, however, keeping a close eye on selling into major support with oversold momentum.
Outside day tells me to keep selling retracements with new lower lows, keeping an eye on major support below us as your targets.
The bear channel tells me the same thing, sell new lower lows with retracements.
The price wedge is the variable. We are at the lows of the wedge, so we expect these lows to try and hold.
I want to buy the lows and sell the highs of the price wedge, so im looking to buy as price keeps dropping at major support levels below.
If price keeps falling, im selling new lower lows.
I have major support at 3392, 3350, 3200 and I will be looking for profit targets at that support, or for the price reversal to begin buying this back up.
If price trades sideways right here I need to be careful, we are at the lows of the bear channel.
If price rises back up im buying new higher highs with pullbacks in an attempt to get back into the range above us.
If price gets back up into the PLOD above 1.3525 we then turn INSIDE DAY and we should be looking to buy.
The Mini Russell has three price structures…
Price Wedge above us is a magnet for price
Outside day tells me to keep selling new lower lows with retracements.
Major support levels below us are great for profit targets for our shorts, and entry locations for price reversals for buying opportunities.
As price drops im buying at the major support levels first, and then selling retracements with new lower lows.
Im also looking for the time when the sellers exhaust and the buyers reverse this move back up. Im looking for wave failures and then take a 2step long pattern to buy the failure and bring price up to the range above us.
As price rises I’m going to buy pullbacks with new higher highs with the goal of getting up to 652.3 the PLOD.
If we get above the PLOD we then aggressively buy as the buyers are now in charge.
If we trade sideways we need to be very careful not to FORCE the trades until we see higher highs or lower lows.
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