Crude the Gift That Keeps Giving , Chart – $CL


crude_CL Crude continues to pay the early bird with a pre-opening move from the sell side followed by a sweet reversal shark attack from the buy side.  As they say, “If it walks like a duck, quacks like a duck..”, Tuesday’s opening moves had a purpose!  A purpose that is best left to someone else.  Remember, caring about the who, what, where, when and how of a move usually takes longer than the move.  Attempting to determine why a seller is selling or a buyer is buying can be best compartmentalised next to fear and doubt and replaced with moving averages and pivot points!

Voiding emotions and actually trading without emotion is a big key – and I do mean big!  When emotion comes into play – focus is diverted and what should have produced a 10 maybe 15 ticks winner turns into a 50 to 65 tick scream fest loser.  On Tuesday, though, it was enjoyable to employ strategy and  stand back to see the “bigger” market find its level and bring in the volume to change direction.  Squeezes in either direction created by the constant “baiting” of the algorithms presented some wonderful “gnat on the elephant’s ass” trading opportunities and for those trading an hour pre-market were rewarded with a net +42 tick slide to an early low.

This was followed by feeding frenzy to the upside that captured +76 ticks on strategy, (signal to signal) based trades. The balance of the trading session continued to give making trading the chop easier to handle.  On the day, strategy grossed +147 ticks allowing 25 ticks for slippage and commissions the net was +122.

Check out today’s chart for additional discussion and trades:


Monday November 9, 2015 – Today’s Chart(s) $ES, $CL


I’m sure that many traders woke up with the Monday morning “blues” as most markets traded lower.  Regardless of direction, though, there were many opportunities across the board.  If you trade multiple products, it could have been a difficult day trying to keep up with all the signals.  Today was a clear case for good “audibles” from your signal generator.

crude_CLEarly birds in Crude were thrown a monster trade first thing out of the gate Monday with a short from 44.90 staying intact down to 44.25 for a quick 65 ticks.  An hour later the market added desert with an additional 42 tick decline, that ended up adding another 16 ticks to the day.  While the balance of the day provided ample op’s to trade from both the long and short side the net ticks per move contracted a bit.

Overall strategy in the CL netted +120 ticks per contract.  Check out the chart below for today’s trades.




S&P500The equity market indices reeled in some of the “irrational exuberance” on Monday quickly forming a downside chain of kick or hit the bids.  The first two hours of trade were basically contained within sharp periods of selling interspersed with feeble rally attempts or running chop.  The ES began the session with a failed rally attempt as opening orders provided some of the best short entries on the day.  Once “lunch hour” kicked in there were periods of stronger follow through on rallies which ultimately culminated into the last hour push higher. Here as in crude traders were kept busy and I received the same feedback in the Trade Room from YM and NQ traders.


Check out the chart below for today’s trades and discussion:




Crude, $CL Chart 11-02-2015


crude_CLCrude continues to have more “moments” of 20+ tick moves than the equity markets over the last 5 trading sessions.  In the absence of any strong economic or oil related news trading was primarily a steady ebb and flow producing solid enough signals for trading.  Today’s net total of +51 ticks was per contract and using my  “signal to signal” strategy.  This implies that buy or sell entries were taken on all generated signals.  The gross total for Monday was +76 ticks per contract.  I  allow 25 ticks, minimum for slippage and commissions, again based on “one” contract traded.


Check out the chart below for today’s trades:



S&P 500 ($ES) October 21, 2015

High-resolution 3d rendered binary tunnel for technology backgrounds

S&P500The ES started the session with some quick chop as traders paired off to decide direction.  The first 30 minutes easily gave way to stronger trends for the balance of the session.  Learning to trade without emotions seems to be the best methodology when stepping into the world of algorithmic trading.  You can’t care as to the who, what, where or when of any rally or decline. Nor can you pre-decide the strength of the buying or selling taking the market up or down 8 ticks or 48 ticks.

Trading is controlled by a myriad of computer programs on steroids.  The sheer volume of algorithms running complex equations and trading at the speed of light, (fiber optics) should not come as a surprise.  Understanding this makes it vividly clear that the old saying, “If you can’t beat ’em, join ’em.” remains valid for day trading in 2015.

Check out the chart below for today’s trades.  Again, I trade using the Diversified Trading Systems and DTS Trade Manager as an execution platform.


Crude Oil – Trading CL – October 20, 2015



Crude Oil continues to be a profitable day trading the front month.  Currently,  that is the December 2015 contract.  Tuesday’s trade delivered winners trending both higher and lower.  Shorts proved to produce the larger moves.  There were also 3 periods of “whiplash” and counter trend trading.  I would describe “whiplash” trading as a small period of quick whippy 10 tick rallies and 10 tick nose dives coupled together back to back and taking back on Tuesday, 46 ticks.  I also include what some might consider a large amount for commissions, but the amount also includes slippage on entries.


Check out the chart below for today’s strategy trades.






Black Monday, October 19, 1987


economicsGetting Back in the Habit

I believe the best way to induct myself back into the creative habit of writing my market thoughts in a somewhat narrative format is to actually put down what I experienced during the day and how I dealt with it – trading wise. While I have experience trading many different futures markets I have been focused on Crude Oil, (CL), the 30-year bond future, (ZB), and the S&P 500, (ES). Each of the three markets presents its own set of trading quirks, but all tend to be controlled by algorithmic duck and cover at break neck speed programs running against a myriad of trade combinations to include but not be limited to; options, (greeks hedging), arbitrage hedging, futures spreads, component trading in the case of the NQ, FOMC and anything interest rate related in the case of the ZB, and EIA and OPEC announcements along with EUR/US $ gyrations as well as options hedging in the CL. And we can’t discount or forget the huge commercial users that move in and out of the market to adjust supply and demand needs.



Monday, October 19, 1987


Today is the anniversary of the Black Monday Crash of 1987. It’s hard to believe that it was 28 years ago occurring on Monday, October 19, 1987. The “crash” began in Hong Kong, moved west to the European markets and then jumped across the Atlantic to smash the U.S. markets. I was in London preparing to sign an employment contract with a major U.S. options trading firm that was expanding their European trading to include the European Options Exchange in Amsterdam, the Netherlands. I was going to sign my contract, go out for a celebratory dinner and spend the night in a swanky corporate apartment in Sloan Square and then head back to San Francisco the following day.   The sudden reversal of fortune(s) wasn’t apparent until I was watching the BBC Nightly News, which opened with a huge red arrow pointing down next to the DJIA and the number 508.


The probable primary causes for the declines were: program trading, overvaluation, illiquidity and market psychology. The selling by program traders was likely due to the avalanche effect tossed into play by the computerized selling which was kicked into gear as the required selling by portfolio insurance hedges attempting to engage their arbitrage and portfolio insurance strategies. This is turn produced a heavier reaction by program traders as the avalanches took hold triggering additional sell orders. Volume thinned as buyers scattered and the sellers hit the markets with wave after wave of market sell orders.


In 1987,  this was a massive and very destructive move down – a crash. In percentage terms, the largest one-day decline in the DJIA remains October 19, 1987. By the end of October of that year the Hong Kong market lost 45.5% the U.K market was down 26.45%, the U.S. market dropped 22.68% with Canadian markets slipping 22.5%. New Zealand markets were hit the hardest losing nearly 60% and taking several years to recover.


After the Crash of ’87, regulators overhauled trade clearing protocols, which brought some uniformity to most prominent market products. This was also the time when “circuit breakers” were developed and implemented. Giving exchanges the authority to halt trading in instances of extreme price declines in the major equity indexes, such as the DJIA, and S&P.

gdpdropsThe largest intraday point swing occurred on August 24, 2015, when the DJIA hit an intraday  high at 16,459.75 and an intraday low at 15,370.33 producing an intraday swing of 1089.42 points and a net change on the day of -588.40 points.  On a percentage basis October 19, 1987,  remains the leader for largest daily percentage losses at 22.6%.  The percentage change of October 28 and October 29, 1929, is 12.82% and 11.73% respectively.  The crash of 1929 kicked off a multi-year global depression with a two-day total percentage drop of 24.55%.  Although the DJIA suffered larger net change losses in 2008 with October drops of 733 points on the 15th, and 680 points on the 9th.  The DJIA also experienced a 777 point drop on September 29, 2008, and a 680 point drop on December 1, 2008.

The damage inflicted on the U.S. economy during the October 2007 to March 2009 financial crisis was hardest felt in the S&P which lost 57% of its value, with the NASDAQ losing 55% and the DJIA shedding 54%.  The recovery has been selective with many in the middle half of the income spectrum dropping off the “spectrum” altogether.  This trend is likely to continue for a bit longer, but the light at the end of the tunnel in terms of the “you know what” hitting the fan.  The longer term pictures continue to point to a major top in the equity markets being reached very within the next 12 to 18 months. Interest rates remain the larger caveat as to when rates will actually begin to rise  and then of course the $64 trillion question is how quick a quarter point rise turns into a half point rise to a full point rise as the global Central Banks attempt to stay in tandem with one another.


Crude Oil – (CL) December 2015 contract

I trade using the Diversified Trading Systems platform through Ninjatrader.  Within DTS, I primarily use the Eagle with UniRenko bars and Trade Manager as an execution platform. I run two algorithms that produce buy and sell signals.  I trade using an ATR trailing stop that is risk adjusted for each product.  Additional indicators include an ADXVMA alert, Price Action Swing oscillator, and Stochastics.

I continue to enjoy and recommend day trading over position trading.  I do not carry any futures positions overnight.  Currently,  my primary focus remains crude oil, (CL), the 30-year bond, (ZB), and the S&P, (ES).

Below is today’s chart for crude, (CL).  Future posts will include a trade by trade tracking.  On the chart below trades can be followed by longs being marked by the blue dots below the “green” bars and shorts marked by blue dots above the “red” bars.  I track trades from signal to signal and include all signals that are generated from the 9 AM EST opening to 2 PM EST.