Skip to main content

Flipping from Nuetral/slightly bearish to cautiously bullish

This morning I closed out my iron conrdor in RBOB for a break even trade exactly. As the markets keep challenging overhead resistance levels and set up bullishly over the last few weeks. I have found myself less and less convicted to the downside on RBOB. I made my last short on RBOB yesterday and almost made one more today which would have worked out just fine. But with the positive news hitting the market this week and the bullish formations on the major indexes I had to switch my lean from nuetral/bearish to caustiously bullish...until otherwise proven.
First lets take a look at the /ES:


In the above chart I highlighted in the grey box the bull flag that I see forming. The /ES has been consolidating and digesting its move off of the lows (a 4-5% move) and looks to be setting up for a move higher. The reason I include the S&P 500 into my analysis, is because the correlations between it and the oil commodities have been significant. I actually ran the correlation between RBOB and SPY for the last 100 days and it is sitting at 0.88 (the most correlated of all the oil products).



So until this relationship goes away I will continue to look to the equity markets for clues to the next move in the oil futures that I follow: RBOB, HO, CL.

Now onto RBOB and the trade that I took right before the GLOBEX closed down at 2:15 for its routine 45 min close.

First on the daily chart below you will notice that I drew a trendline from 1.7850 to 1.9680, as RBOB has made a series of higher lows and higher highs...textbook uptrend. In addition to this trend formation it is also forming an ascending triangle which also is bullish. And in case that was not enough it also looks like equities are going to break out to the upside.


So the trade...I set an alert for a RSI cross into oversold conditions on the 15min time frame. Although this did not close in oversold conditions, this is where I decided I wanted to get long. The alert triggered when RBOB traded down to 1.9225 and I immediatly put in a market order to buy 5 contracts and was filled on average at 1.9279. I am looking for a move back to at least the resistance level and maybe even beyond, my entry is right at former resistance that I had used as a pivot for a short the other day which was good for 1ct.

Immediatly after executing I put in a stop at 1.90 as to mee this would tell me that I am completly wrong on this trade and save me from any drastic move in the overnight market. Additionally I put in a few limit orders in case the market got there in the overnight session. I put in a limit to sell 2 @1.94 and 3@ 1.96. I was executed on the 2 @ 1.94 and it is yet to be seen what will happen with the other 3. As I write this RBOB has been as high as 1.9504 in overnight session and is currently trading at 1.9464.

I will update as this trade develops.

Note: I have done a few day trades that I have not posted about as I do the analysis intraday and it seems like a burden to do a post on a trade that I am in for less the a few hours if that.


Comments

Post a Comment

Popular posts from this blog

WOW! I think that sums it up

Many of you have been reading this blog may have noticed that my blogging frequency has increased over the past few weeks as I got short the market. As you can imagine I am down money since getting short the market, this is the time when most people pull away from posting. But my goal is to stay active and involved and show you that trading is not always rainbows and butterflies. It is times like these that the things I have been sharing over the past couple of weeks are so important. You need to trade small relative to your account. I have a decent short position in the market and my portfolios are set up to make some awesome returns if we finally turn lower. But something I would like to point out is that my account is 70% Cash.  I learned a long time ago how important it is to live by the rules you preach. Because of my discipline I am able to continue to hold my positions, I have time and capital on my side. I can't stress enough how important it is not to get to big....
Post a Comment
Read more

Stay Small, Stay Out of Trouble

To expand on my post from yesterday about patience. I want to talk about a very important element that allows patience in a position, and that is staying small. If you trade too big RELATIVE to your personal account size, you are likely to be forced to exit the trade before the trade works in your favor. Many trades myself included have all experienced the pains of trading a position way too large given our account size. There is this predisposition out there that the only way you are going to make money in the financial markets is if you are trading 10 lots of options and 1000 shares of stock at the time. This is not the case, and if this is your mentality you will likely ensure yourself trouble. We have all read the stories of traders blowing up their account. I personally think a good rule of thumb is to not risk more than 5% of your account value on any one position. Good Luck Trading! In The Money Trades And 1 favor that we ask:  If you like the hard work w...
Post a Comment
Read more
more good news from FXStreet : Tom Fitzpatrick, senior technical analyst at Citibank in New York. Monday, July 15, 2002 "Parity is a psychological, not a technical level...and whether we pause around parity or not, we are likely to see significant further dollar losses...Our initial target is $1.03 to $1.0450. If that level is taken out, it actually casts a question mark against the whole of the dollar's rally of the last seven years, and could open up a full-blown bear market for the dollar." Julian Jessop, chief European economist at Standard Chartered Bank. Monday, July 15, 2002 "The dollar is under pressure from everything from economic problems to asset reallocation away from the U.S. and corporate accounting problems. It's difficult to see any positive factor for the dollar at the moment. The root of the problem is the U.S. current account deficit. If the U.S. doesn't have to attract an enormous amount of foreign capital, people wouldn't have to wor...
Post a Comment
Read more