Rob’s Big Kick-off Video to Start FOMC Week Right

Starting FOMC week off right

Welcome back gang! It’s great to see everyone and great to be back from the wonderful time away I had with my lovely wife and to spend time focusing on her for the last week. Now we’re back, we’re fresh and we’re ready to do some great things here. Today was no exception, but you know what? Even while we were gone a lot of great things were happening here. Randy did several fantastic futures and options trades. He was cranking out futures as well as options trades in the Live Trading Room. Of course, that is a part of our awesome options trading program. Just a fantastic week even in my absence and then we came back charging out of the gate sharing some incredible strategies. Make sure you watch those Premium Day Trading Video today on the other side of trading opportunities that exist each day for people in addition to the core set-ups. What kind of trades we have while we’re waiting for those set-ups to take place. Pretty cool stuff in that video tonight.

So as we go ahead and we kick-off here let’s do a little more thorough video this evening on some different areas. Number one, let’s catch up on the EURO. First of all, the EUROs going to be one of these instruments… Let me just give you my overall strategy for the next couple of days. I’m definitely focused primarily on options trading and intraday strategies. I’m not focused on really short term swing trading, bonds, financial stocks. I’m getting a lot of questions about financial stocks. People asking me about taking big bets in some of these financial firms ahead of the FOMC in a couple of days. Gang, there’s really a couple of things you need to think about here. We don’t just have a traditional FOMC meeting; we’re also discussing the end of tapering, we also have the end of Ben Bernanke’s tenure with us. Again, whether you love Ben or you hate Ben is really irrelevant. What is important to understand is we look towards Janet Yellen coming forward here. What will she do to help or hinder the markets from the market’s perspective? So there’s a lot of big things coming out in these next several days. Pretty cool stuff. I’ve encouraged everyone from the Live Trading Room that they are absolutely here. I know that some people are sliding into a holiday mode. I think that’s a big mistake and we’ve already kind of proved that just from all the trading that’s already taking place here while Randy was here last week. Several options and futures trades. Huge mistake to be stepping away right now. There are too many opportunities. So, all hands on deck, you’ll definitely want to make sure you’re here this week.

With that being said, certain instruments are going to warrant stepping away for a few days here, especially on multi-day/multi-evening holds. I’m going to definitely focus more on the options trades that we already have out there and on the intraday for the next couple of days. I did take a look at a couple of swing trades in my Swing Trading Video and I’ll look at a couple more throughout the week. You’ll notice a theme in tonight’s Swing Trading Video that I’m avoiding some of the financial stocks.

Bringing it Back Full Circle in the EURO

So as we look towards the euro we will come back and bring this full circle from comments before I left. You recall that I was looking to get above this 13620 area (on my charts at 3:46). If we can get above that 13620 I was looking for a good move right back towards the 13700. Then from the 13700 what you’re looking for, of course, is to break back above the 13720 area. That helps give me more fuel for these overnight type moves that are likely to move onto the next key level. In this particular case what we had was that we actually gapped up above the 13700 level, traded back down towards it, started pushing right back through that 13720. That’s a pretty good sign that we’re heading right back to 13800. Well 13800 is about as far as we’ve gone in recent memory for the euro so this is a major and important key resistance level (on my charts at 4:25). So we’ve just been playing at the strategy here to play from key resistance level to key resistance or key support to key support.

As we close out Monday here we can see that we’re right back to that all important 13800 level. That’s a big deal. Now we’re kind of locked in here by accumulation that was put into this system on Friday and distribution that was put into the system today. What that basically does in summary is makes it a very dangerous place to be anywhere from here (on my charts at 5:09) to here. It’s highly likely to whipsaw against your position in a very short order. So it is a very dangerous place to be and again, being financially sensitive such as the currencies are, two days in front of the FOMC it doesn’t make a lot of sense to get too cute with this in the short term. We’ll be looking at those next levels (like above that 13800 and below 13700) as we come out the other end of the FOMC meeting.

Crude Oil and Transitioning Contracts

As far as crude oil is concerned we’ve been hanging right around that 9750 level all week while I was gone. We traded a little bit above it and a little bit below it. That’s a key middle marker for crude oil. For those of you that have been with me over the years you know that I’m very coarse in key strategies around this 9500 to 10000 level and that mid-point of the 9750. So as we go into tomorrow, once again, we’ll be focusing on day trading. I’ll look to see if we can get above today’s high and find a short term move back to around the 9820 level or so. That will be one thing that we’re focusing on there. Don’t forget, over the next couple of days we’re going to be transitioning over to the G contract from the F contract in crude oil as well. The volume is slowly moving over there. As we close out today we had about half the volume in the G already from the F so we’ll continue to watch that migrate over and be switching over pretty quickly.

Using Pullbacks as an Additional Entry Point for Trades

As we look at gold it was just a wealth of opportunities and discussions today in the Live Trading Room. I was showing people that there’s two different types of trades and a lot of times we find ourselves sitting there saying, “look I think this is going to go up but I have to wait for this pullback first and then find the reentry opportunity.” (on my charts at 7:17) How do we take advantage of the pullback itself? That’s what we spent the whole morning discussing; the very specific tools and strategies we use to identify the pullbacks. I’m well known for identifying those short term tops and bottoms. What can we do with that in the meantime while we’re waiting for those predominate trends to kick in? It was a pretty cool sessions and get back into the swing of things this morning. I want to caution you with gold and it’s the same thing I mentioned to everyone in the trading room this morning. Gold over the next couple of days is going to be prone to severe spikes up and down in advance and during FOMC time. We already saw multiple spikes this morning particularly to the upside early on but then we had some down drafts later as well. We talked about that this morning so just understand that’s going to be the way of doing business, if you will, for the next couple of days with the FOMC. In the bigger picture I’m trying to get back below the 12200 level. You’ve seen that the best we can do is had one quick close below there and then it is immediately rejected. We can’t get a good two bar break, even back here (on my charts at 8:32). Do you see that we had the one bar break and then it was immediately reversed? For those of you that are familiar with my two bar break strategy we just couldn’t get the two bar break strategy in place. We’re really looking to see if we can get that for further downside. In the meantime, I’ll be looking to tomorrow to see if we can get back down below the 12200 or if we can get back above the 12520. There’s approximately 100 ticks of opportunity in the short term there. So, there is some opportunity in this area of here.

Taking a Look at the Stock Index Futures and a little about the FOMC Meeting

As we look to the stock index futures this was another great one that we were able to focus on this morning with that concept of finding those extra trades. The stock index futures are holding on for dear life. Going back to the previous week here, you recall that back over here (on my chart at 9:29) was the weekend video where I said that a big move was coming. Sure enough, we had that nice push to the downside. It got rejected down into rising support which is exactly what we’d expect. It went then and found resistance right back up there into that distribution bar and, this is a shocker, we have a stochastic spike to boot. So, it ran out of gas right into the previous distribution, rolled right back over here to the downside (on my charts at 10:02) now cut deeper. So this morning when we opened up we had this nice pullback to the downside and then it pushed right back up to the falling resistance. That’s where it got stuck today. So tomorrow is a real key day as we go into this. The path of least resistance would be to open up tomorrow and even if we pull back a little its fine, but then start pushing back up. Why? It would be easier to try to get a short term up day above all of the gobbeldy-gook and key support and resistance levels up above here (on my charts at 10:38). There’s more air up above. If we stayed mixed in down here (on my charts at 10:41) the likelihood of whipsaws and people like the average retail trader (you can see this playing out there in advance of the FOMC) getting caught in some whipsaws back and forth and getting frustrated right before big moves take place with the FOMC and that. Then people will be too afraid to trade. If we can’t get a clear cut and clean signal going into tomorrow it might be better for you to just step aside. Also, look to see if everything from the S&P on down if you can get all four of the stock index futures to be trading back above the speed lines or are they down below. That’s going to be a key thing especially as we go into tomorrow where we had this consolidation pattern today. Can we get back above today’s highs? Well if we get back above those highs on the NASDAQ that will get us above the speed lines on some of the other key stock index futures as well.

That’s going to be a key thing to watch and again, you’ll notice the words “watch” and “focus” being used quite a bit tonight. We do want to make sure that we’re really paying attention to what’s happening here into the next couple of days with these FOMC announcements. How will the markets react to Janet Yellen? All of these things that are set to come about are going to important to watch and focus on to make sure we’re taking the right trades at the right time for the right reasons.

Watching and Focusing on These Couple Things

A couple of things to look at in addition to the areas we’ve already discussed. In the Japanese yen it ultimately went and closed right back down at the speed lines. We were looking to see if we could get it closed back above the speed lines and make another attempt at a speed line to 20 trade. We’ve had a couple of attempts at that already. We get one bar closed above and the next follows through more than 50% of the way but then gets killed off of the stochastic spike. Then back over here (on my charts at 12:37) we made another attempt that closed back below the speed lines so we didn’t get the attempt over here. Now, today we made another attempt but we couldn’t get the close back above the speed lines so, once again, we still don’t have that nice close back above the speed lines to help up forecast the move to the 20. I’m just going to be watching this now more so from an accumulation distribution perspective going into tomorrow and beyond. We’ve got an accumulation bar here and a distribution bar here (on my charts at 13:06). Can we effectively break above the distribution for a move back to the 20 or do we break below the low for intensified selling.

As far as the bond is concerned, again, on the financial side, much like gold it is subject to volatile move and volatility. I think for the most part the best thing to do is to step aside from this for the time being. Certainly the next major thing I’d like to see is a break down below this recent accumulation bar that we had over here (on my charts at 13:39) because the likelihood of that foretelling a move down to the next key support is high. Let’s see if over the next couple of days if the news can break us back down below there. That would be the more favored trade. Otherwise, I’ll probably skip some of the long-side trading over here and focus on some of the other instruments like the stock index futures, gold, crude oil and individual options plays.

Those are a couple of key things and I will look forward to seeing you guys here in the Live Trading Room tomorrow morning or in tomorrow night’s videos. It’s great to be back with you guys. Great trading to last week. Great start to this week. I’m looking forward to following through and closing out this week strong with all the great FOMC stuff coming up.

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