NO GOOD OPTIONS

                                             Well, Not Here

This is the kind of day that presents no good options for a trade. We have cross-currents all over the place and add to that it’s Friday, and you have markets that are everywhere and nowhere at the same time.

First Crude.

Yesterday’s final hour blow-off [a Saudi oil pipeline blew up] of 200 ticks to 110.50, subsequently followed by 200 ticks down did a lot of technical damage. It basically took today’s weekend short covering and made it show its hand yesterday, thereby robbing today of buying demand.

From today’s first hour of light buying, it was straight down. Again today, I bought crude after the range was put in at the 106.05 low [295 ticks]: I was too early. Although I got out with a few pennies profit before it went even lower to its day low of 105.79, until the final low was put in it was very difficult for the market to stay on the bid.

After the final low, it was pure fireworks; up 50 ticks in 4 minutes with another 70 ticks in the next 50 minutes before selling off 50 ticks in 6 minutes. With the algorithm on the buy side, the window of opportunity today for profits was very, very tight.

It very much looks like the market can fill the 103.88 gap on the daily candlestick charts next week. From where the market is as I write this, it’s only about 240 ticks away. If gold can test its lows from this week, crude has a shot to fill the gap. This would not only fill the gap, but it’s about half way back from the start of the rally. A break of 102.50 and I would question the sustainability of the bull run for the near term.

Crude offers many opportunities, but you have to be selective in how you trade it. Every day this week, the algorithm was in “buy node”, yet every day this week except Wednesday, the market broke down rather viciously, setting off sell stops in the process.

As I state in the manual for trading crude, play the range and watch out for reversal days. Pick your spots using the algorithm.

On Wednesday, we had the rather unique event of gold being down over $100 / oz., and crude rallying $2 / barrel very late in the afternoon after most traders had departed [including me].

Yesterday’s $2/ barrel rally after 2 PM on the Saudi oil pipeline blow-up was the only other rally of significance for the week.

So, considering this is it any wonder why my volume in crude was so low while I was buying all week? Well, it shouldn’t be because you all know my first priority is to stay out of trouble. Granted, the money I made wasn’t much each day in crude, but it was probably the worst week in memory for trying to be long each and every day.

Now Gold.

The the other shoe  is gonna drop.

Maybe we just test the lows at the 1700 – 1685 area, or maybe the next Asian hedge fund blows its metaphorical brains out by giving JPM a market order to sell 30 metric tones of gold at the market. I dunno, we’ll see.

While the algorithm is in “buy mode”, given what happened this week on Wednesday, I have to see a minimum of the test of the lows before I buy gold off the algorithm. I’m not going to expose myself to “the other shoe” on a Friday unless I see this, and we didn’t see it today. That’s why I never tried to position myself in gold today.

If we could have gotten down to 1695 – 1699 area, followed by a very quick bounce back over 1700, I would have made the trade to be long.

Going forward, I don’t think we’ll see the lows in gold until Asia sells it off. They buy gold practically every single night, and until we see them capitulate in some way, we can’t get the reversal off this low that the market needs to go higher in the European and U.S. sessions. We’ll see what happens next week.

Have a great weekend everyone.

-vegas