Here we are in another sea of red— not literally but as I look across the board and scroll through my twitter feed, texts, and emails… the theme is PANIC, SELL, OFFER… I just don’t get why… that being said, it doesn’t matter what happened, or why, — *where are we going next, and how am I going to manage risk through it, is what I am thinking.

After a strong rally in Gold last week, we have retraced into and through the weekend, with all the metals trading at a discount to their closing prices of last week. (Not going to even get into Platinum with all this Volkswagen talk “pricing” into it, but that market at 917 is relatively cheap imo). To me, gold is literally treasure, I mean as people want to throw it out, I have generally been a bull for the shiny historic safe haven, — every book, movie, story, almost always gold has been around, and it has had/held value above other assets and currencies. I haven’t seen many stories where gold is completely worthless, or not desired… that being said, I guess for now, even as stocks sold off today, and the USD — people didn’t want Gold. (For some reason US Treasuries were preferred as people looked for a flight to quality). — Oh.. But “we are going to raise rates this year”, ha, so not like those note and bond prices aren’t gunna have downward pressure… they were perma-bid today. Gold GC sits @ 1132 and is currently trading +.30 or +0.03% for Tuesday.

Next, even though there was a firm short squeeze and bounce higher in natty gas over the weekend, as many did expect this seasonally… this wasn’t enough to bring the energy sector higher, nor a bid to the main event, Crude Oil. The CL contract at the CME was down over -1.27, settling at 44.43… although I never like to see Oil in the red, especially in this exact market environment, we are in good company, as we have been range bound often rallying back above and through 45-47 when we have dipped to this level. I had blogged and been tweeting about the ridiculous back to back draws in the data like API/EIA for Crude inventories (but no sustained rally), I guess we will see this week starting tomorrow with API (after Tuesday close) and then Wednesday the headline EIA Petroleum Status Report will provide some serious color on the “supply” story regarding Crude. Nothing to write home about, but currently since the 5pm open, Crude Oil (CL) for Nov is trading +.09 +0.20% @ 44.52… Although this is not a large move, it is encouraging that the first reaction for whatever reason, is green, and heading towards being greater than 44.50— the key is to be around for the move higher, but sometimes we see markets have to get down, to get back up. I would not be able to really stay in Gold, or a Crude Oil especially if it wasn’t for using puts / hedging / stops, basically it is important to just be able to stay in the game and live to trade another day, so we can see if today’s trash truly can be tomorrow’s treasure.

The last market I am looking at and always focused on is the all mighty Spoos — which are the E- Mini S&P 500 Futures. The ES settled deep in the red a whooping -47.25 points, to mark at 1872.00– this level required me to step back and check out “where we are” in the stocks. I wanted to take a look at the 2 hour over a few days, and then look at a multi year in week ticks… It brings me back to the opportunity earlier this year the week of 8/24/15 as well as “coincidentally” looks similar or giving me deja vu to just past this time last year as the BTD mentality rocketed stocks higher into 2014 year-end after a dip lower last Sept-October (to this sub 1900 level). Tonight the market is in Asia-Europes hand before we get Redbook, Consumer Confidence, and really the week started– Calendar looks busy, especially come Wednesday. — The key is to be in the game for those moments, and to be able to trade them!

Currently the Spoos ES are trading @ 1877.25 +5.25 +0.28% — Let’s see where they go into EOM and weekly, as well as option month expiration approaching.

Let’s try again tomorrow. – Happy Trading.

-Bret Rosenthal

Follow @TheMarketQuote

Today was one of those days where the metals became a safe haven as uncertainty had stocks and the USD on the edge. I have been staring at Palladium and Platinum as this Volkswagen headline coinciding with 5-6 year lows in Platinum had the precious metals “in the news”. I knew this would create something, this in addition to some of the other commodities and fx gyrations we had today was the perfect environment for Gold and metals to shine.

Gold for December delivery rallied $22.30 or 2% per ounce, settling at $1153.8 on comex nymex… this is a massive leg higher for the usually sleepy boring old metal. This is significant as now Gold pivoting around the 1150 level brings the safe haven to its highest close since Aug 21st. Some say it was the weaker economic data, some will say it is because the fed didn’t raise, I am saying it is because Platinum set up a short squeeze as the headlines created a funky order flow a few days ago… but who cares– it doesn’t matter why it happened, it matters that it happened– we are here to trade it.

I have been stalking the precious metals for a long time, for years actually, so a day like today is precious as the last few years — we don’t go up as often (and I generally scalp to the upside). I mention this because overnight and this morning, the rip higher, the strength in GC’s ability to short squeeze has been ingrained in my brain — one of the first things I ever learned when I started trading was: “You can’t short Gold or Oil”. For a long time, this was the bible, this was true, anyone around me who was shorting these commodities specifically ‘without a good reason’ was consistently getting screwed or blowing out. *Times were different, markets were different, etc. etc…. blah blah. But there is truth to that, clearly we are in a different era of trading today — it is not that markets have changed, but the
options / products have changed, — the leverage has changed.

I think with weekly, quarterly, and end of month options, the ability to “trade” has never been easier (for lack of a better word). I say easier in the sense that: anyone can do it (or try it). Not saying they will be successful or that a certain strategy will work, but literally, there are so many different ways and plays one could make to invest/trade anything. By using the different options, one has the ability to define and take such precisely leveraged trades like never before. Where as back in the day maybe we only have monthly or quarterly options, now we have not only both of those, but also weeklies, this means that the market has the ability to move as much in one week as it used to in a quarter or month. People are able to define their risk so intelligently, and accurately with the tools today, I think more than ever- anything is possible and time isn’t an issue, markets never have moved faster. The market doesn’t care about me, I know this, so I just try and be conscious of the aforementioned thoughts and it has thus far kept me in the game.

As far as gold and platinum go, the best part about the trade was that I waited for it, and it worked out. I was patient, honestly had to talk myself into just trusting the position and since I could define my risk using the options that were expiring earlier today in Gold (GC), I knew what I was risking, and the upside was unlimited. Basically, with the fact that expiration was today, this made it so premiums were very cheap and I could get leveraged up on the shiny forgotten bullion for very cheap. Think about it this way, if every GC margin with the broker is 5500, and I go long 1 GC at 1125, I have $112,500 worth of Gold at risk (if we fell to zero lol), and I need to have $5,500 in margins to hold the position… but since it was expiration, I was able to buy GC 1125 Calls for lets say $3-$5 in premium, so risking $300 to $400 per 1 lot of GC 1125C strikes… Well luckily, we ended up rallying to 1155 today, so these were worth $30 each ($3000 per) for example with the 1125 strike calls, (since they were ITM $30 1155-1125), and sure you could have made the $3000 if you were just long the original outright too — but what if I didn’t get so lucky, what if gold didn’t rip 22+ points, what if it actually stayed where it was, or worse, what if it dropped -22 points! *Being able to define my risk, like the way I was able to leverage up in Gold (using futures options) and continue to ride it up since we were below 1080 this year… that is what has kept me in the game, *not missing out on “up days” like today. Platinum in the 5pm session last night, by 7pm was already +26 points, at that time Gold GC had barely moved– I felt it would catch up, and as it started to come up slow, very slow, I was even rolling up puts since they were so cheap (so if I was wrong, gave me waterfall downside protection). Either way, I was focused not on where Gold GC was that moment, but where it would be in the future, — and it worked out huge. Finally- trading the GC left me with Gold, not coal.

*But that being said, as everyone is now seeing or reading about the flight to quality or fear bid into gold, (from selling stocks) — it makes me want to be long the Spoos ES more than ever, since everyone else is throwing in the towel on stocks, maybe it’s my time to find some treasure. Hmmm… On to the next market/trade.

Let’s try again tomorrow. – Happy Trading.

-Bret Rosenthal

Follow @TheMarketQuote

A lot of people asking me (surprised) today “Why did Crude Oil sell off?” —

My answer, half jokingly, quoting Gordon Gekko — “Because it was wreck-able!” …What I mean by this is, IMO: it almost seemed like everything was aligned for Crude Oil to continue its climb higher, and everything seeming so perfect meant, – it can’t happen.

This isn’t the first time the market (especially CL) hasn’t done what the majority in the moment anticipated it would or should do… or I guess could do.

First off, why did I think Crude Oil would rally? — well, I have been thinking that if we can exploit the “unlimited Crude Oil supply story”, we could start heading North finally. That being said, anytime we have data or information regarding CL and inventories, I am watching— So we had API come in (Tuesday after close) with another massive drawdown, AND THEN we have EIA come in today with another back to back draw…

So as we were already higher on the week from Monday’s strong rip higher in Crude Oil of about $2 or 4%— the people had certainly bid/bought the rumor ahead of the #’s. But, as we got confirmation that maybe there hasn’t been an abundance of CL as we initially were told — the fact is SOLD.

This is why trading is hard, this is what makes trading so difficult. I am not the only oil bull who saw these massive drawdowns and started salivating at the potential new HOD’s to come — but, as the title and CL closing price show, they never did, the new highs never came.

What I did well while the news went my way, but the market (CL) didn’t — I didn’t fight it, nor did I fight myself.

What I mean by this is: that, I didn’t “bet more”, I didn’t buy more oil, or start taking off my hedges (on the dip back), or panic against the move… I also didn’t mentally stress myself out by trying to “figure out why we went down” or if I should change my sentiment this minute. *For me, its just another trading session, its 1 of 250 potential trading days that this product or my trades could have worked out, but it didn’t, this is why I have tomorrow.

The goal is to make money, but regardless of professional or amateur, in trading, there are going to be many times where it “just doesn’t happen”. Today, on Crude Oil, the trade really “took place” prior to all the “news”, it was “wreck-able”, so it sold off, but — I lived to trade another day.

For reference:

*EIA: US DOE U.S. Crude Oil Inventories (18 Sep) W/W -1925K vs. Exp. -1250K (Prev -2104K)
*API: US API Crude Oil Inventories (Sep 18) W/W -3700K (Prev. -3100K)

—Just wanted to check again, ha. *Still look like draw downs to me!

Let’s try again tomorrow. – Happy Trading.

-Bret Rosenthal

Follow @TheMarketQuote

Today we had a classic pairing or “retracement” of the losses on Friday — at least for Crude Oil. Looking at CL from the fall on Friday — there was plenty of opportunity to get long and establish a counter position, (getting ready for the bounce back we saw take place into the settlement). I sat confidently holding my CL position as I watched stocks play their usual games, rallying into the morning and selling off intraday, only to rally and rip higher into the close and through it… Meanwhile as our stocks were able to bid back into the green, and Oil was firm — I was surprised to see the USD was getting stronger.

I saw Gold was lower and not having much of a bid, but I saw this as an inverse play to the higher stocks/oil — as I looked closer, it seemed that the USD strength was likely the culprit to break the bulls spirits, and generally we did not have much of a breakout or ability to build momentum. As I often play “the USD” through USDollar denominated commodities and stocks / markets… I decided to go back to something that was working last week, and dip my toes into FX Futures to play it directly.

What I mean by this, is often times I will make a trade elsewhere, thinking for example “Oh the Loonie (6C) is bid, so here comes the NZD (6N) and AUD (6A) rallying with it… (also commodity currencies)”— This momentum and “bid” in those products (thus weakening USDollars and showing a “bid” in a currency linked more specifically to certain commodities, — I would make a buy or sale in Copper, or Gold, Or Oil for example off of these other FX Futures moving. Basically I am using the market to play the market, as I see real numbers on markets moving, real money moving various asset classes, I know that “The Law of Cause and Effect” and correlations will be kicking in to complete the full picture, —and the thing is, this goes on for 23 hours a day, so the opportunity has not been missed, it hasn’t even happened yet!

This makes two points, one point is that “for every action, there is an equal and opposite reaction.” and the other point is that, I never feel like I am missing a trade or can miss a trade, there is always another one unfolding and setting-up. — The game of futures is not really ever over… this is why it is important for me to constantly best figure out my style, my risk, my plan, as the market doesn’t care about me, — I must always be looking out for myself as I trade these markets. So for now, I am going to do this by staying active, and being conscious of what is going on in other markets, even despite what I see elsewhere, or especially despite what I hear…

A fact is, we didn’t raise rates in September, and I feel like this had to be for a reason (and if it wasn’t- we still didn’t lift off), it doesn’t seem as a realist that we are going to be raising very soon either. I can only do what the market is telling me, but for now, I don’t understand why the USDollar would be getting stronger again? The music hasn’t stopped, so the party should still go on. That being said, we will see where the USDollar ends up let’s say, maybe by Thursday — after it has had a week to digest the fact that the previous Thursday, the FOMC did and said nothing that would make me think otherwise. Hmmm… The Spoos ES hit 2011.75 last Thursday, and now were trading 1960’s? I will not be sitting here trying to figure out when or if we will raise rates, I am going to be sitting here trading, as I have been. *It amazes me how many people still getting wrapped up on that subject (and asking or mentioning to me about rates), when day-to-day I can’t recall any of these conversations really helping me make much real money while really trading markets.

Just like people using “inventories or supply” as argument or justification for Crude Oil prices staying low, or going to 20… HA. — we see this get beat when the EIA/API state with numbers/facts otherwise… we didn’t raise rates, so the FED/FOMC is saying we aren’t ready… so I am not going to front run and bid up King USDollar (since it’s already been happening for a while) — rather, I am going to position for it’s fall. I think the market is smarter than the FED/FOMC, so if they are targeting inflation, we will see it first in prices or too quick for the average trader to catch. I don’t care where markets can move to irrationally in a moment or day, I care about where they are going to be in the future. As I typically would play this fading USD with longs in denominated commodities or stocks, I am not afraid to do it directly in the FX Futures (as well) as we made it past the most recent Fed Day with nothing to really talk about…

Let’s try again tomorrow. – Happy Trading.

-Bret Rosenthal

Follow @TheMarketQuote

Could there be any more volatility in this market? I mean I don’t even think the swings in the VIX are justifying how much volatility there is, and I am not just talking about in the ES. It feels like every Friday continues to be more and more epic… but this being a Quadruple Witching event =’s all the more reason to BE VOLATILE.

I traded the VIX futures (VX) ON Thursday for the first time in months — I mean it was irresistible as it set up one of the most perfect “shake and bake, fake out “V” formations” — I had no choice but to “jump” into a cheap front month VIX as it traded below 18 in the final minutes of trade (this as the ES traded to post FOMC session highs of 2011.75). As I think many identified the opportunities to “front run” settlements around the board, this VIX action into the end of Thursday’s session was right up in the list of “the best plays in town”. — From maybe around 13:50 to 15:00 we rallied almost 3.00 VOLS from a LOD to a new HOD — (taking us from 17.65 to 20.55! *Then today the VIX futures (VX) add another 5% as VOLATILITY consumed the market again, and we’re already trading 21.55… Traders must keep in mind that the VIX was trading over 30 just 2-3 weeks ago around Sept 1st.

While the market was ripping to post FOMC highs — all I could think of was “what’s going to happen next”, as always, I was thinking about the future, and I could only anticipate that the only certainty in that moment of uncertainty: “There will be VOL”.

Anyways, I closed that trade for a fast quick generous winner… and on to the next one. *Don’t get me wrong, this was not the only way to play volatility yesterday — it was just the most direct and pure way, so I did it.

Meanwhile as markets digested “FOMC” – the initial exuberance and excitement (maybe caused by the lack their of) created an enormous amount of opportunity. I was able to front run a lot of settlements as we had a lot of Futures markets “moving” after they had already had their settlements for the day. For example- Gold had settled at 12:30 somewhat around 1117 for the front month GC… but as the FOMC announcement was delivered after the metals settlement, the “rally” for Friday started early,– and we even got some more follow through to the upside during the actual US Session. I will be focused on Gold (GC) even more than usual going forward — this clearly had it’s moment to rise with the FOMC latest decisions (and the deeper implications), trading up to a HOD of 1141.5! Amongst a fairly large sea of RED, Gold was able to shine into the GREEN today… and I think this is only the start, again.

Meanwhile, there were incredibly large moves in the FX today, and what I was trading a lot of was Commodity Currencies like the AUD, NZD, and CAD — I was scalping those to the upside on their high marks from yesterdays settlement (again front-running those settles too)… all while I was dirty hedging it against my bearish day trade from yesterday as the EUR traded up to 1.1450 while other pairs got hit… There was A LOT to do… but we can’t focus on the past any longer than we already have, we are focused on the future here, so…

Time for the weekend!

STAY NIMBLE -> VOLATILITY =’s OPPORTUNITY

Let’s try again next week. Have a GREAT weekend! – Happy Trading.

-Bret Rosenthal

Follow @TheMarketQuote

So— Again— we see that “numbers don’t lie, people do”. Both the API and EIA were drawdowns and now that the data confirmed what the price had been trying to do (again) we squeezed. This is not only significant because we have front month options (for October) coming off the board today, but we also have FOMC. Despite all the “bearish talk, or bankers claiming 20 a barrel” — Crude Oil CL settled @ 47.15 up over $2.56 a barrel! —for some to the highest levels of the month!

Not only do we have FOMC Announcements, Forecasts, and Yellen Press Conference — we have data in the early morning that could get markets moving even before the “main event”. At 8:30 AM ET we have Housing Starts and Jobless Claims, than the Philly Fed at 10 AM ET… we have some other minor reports and treasury announcements. But regardless of what ELSE we have that will be moving markets — ALL EYES WILL BE ON 2-2:30 PM ET AS WE AWAIT THE ALMIGHTY FED.

As I blogged about last night, I am still more focused on MY positions vs. focusing on all the FOMC kook-aid and speculation…

@KeeneOnMarket FOMC imminent, not eminent. *Still focused on Crude Oil. http://t.co/HsgzhOUqjQ — Another drawdown in API inventories Tues!

— Bret Rosenthal (@TheMarketQuote) September 16, 2015

*What I mean by this again is that, although I am conscious of the FOMC and will be respecting the event — I will still treat it just as I do every other session, as I pointed out in yesterdays blog, I still think Monday Aug 24th with the Mini Flash Crash will remain much crazier than today’s FOMC could get, even if we do raise rates.

So try to not get too distracted by all the Yellen this and that, and Fed this and that — and focus more on regardless of what goes on tomorrow, what’s going to happen to your positions, or how will various scenarios effect your position… Basically have a plan, and trade that plan accordingly to your positions and individual risk.

Focusing on CL last night and not the FED turned into one of my “best” sessions or trades yet — and I anticipate there is only more trading to come. So I will be ready and patient as I listen to FOMC, but I won’t allow it to “scare me from participating”… I will be trading.

As it says in the title: “I left money on the table” — my goal is to be able to say this more often.

Happy FED DAY… GL ALL.

Let’s try again tomorrow. – Happy Trading.

-Bret Rosenthal

Follow @TheMarketQuote

‘Twas almost the night before Yellen… BUT it is the start of the overly anticipated FOMC meeting… and I don’t care what they are about to do. Because I don’t know what it will mean or do to markets, and neither do you.

Anyways, I am still focused on Crude Oil, and just treating it as “business as usual”. I can guarantee this, I don’t anticipate tomorrow or the actual FOMC announcements/forecasts/conferences to bring MORE volatility than the recent Aug 24th Monday Morning Mini-Flash Crash. What I am saying is, if you survived that trading day, heck, maybe you even made profits — then this should be a walk in the park.

For reference, that Aug 24th Monday Morning Mini-Flash Crash had the Standard & Poor’s 500 Index plunging 5.3 percent in the opening minutes, which is the largest intraday loss in four years. The market bounced up, only to come back down, and pattern continued through the day until the close, when the benchmark finally settled down 3.9 percent. —So, if you are reading this, and still trading today, I think you have made it through a “crazier” event, than what we are about to see.

If anything, if I’m wrong, the effects will be felt far beyond the FED announcement itself, if there is truly a paradigm shift in the offing, than this will go on for days. So what I am personally doing, is preparing more for the “future” and less for tomorrow or the next day. This is one of the rare occasions (there are only 8 FOMC meetings a year) that can single handedly influence any and all markets in a moment. Something I am keeping conscious of regardless of what information we digest during or after this most hyped FOMC decision– is whatever decisions I make after the event, depending on what is said, could be the start of something unfathomably larger and different than we have ever seen before. I could be wrong. Forever.

So as of course, my mind can be confused and consumed in the most common market scuttle — as can yours… but as I started tonights post — I don’t care about the FED, I am focused on Crude Oil, and I am managing that position (front month expires Thursday), and that takes time, which is why I have time to think and speculate about these matters.

Besides we won’t know if we are really wrong “forever”, until the FED minutes (from this meeting), and that isn’t released for a few weeks. — All the more reasons for me to focus on my Crude Oil CL positions.

Numbers don’t lie, people do. We had another DRAWDOWN in API Tuesday after the close! I have more questions about CL than I do FOMC. Let’s see what CL can do tomorrow – (as we have more data in Wednesday’s EIA Petroleum Status Report due out @ 9:30 AM CT).

US API CRUDE OIL INVENTORIES (SEP 11) W/W -3100K (Prev +2100K) – API CUSHING INVENTORIES (SEP 11) W/W -1500K *Yet another drawdown… $CL_F.

— Bret Rosenthal (@TheMarketQuote) September 15, 2015

Let’s try again tomorrow. – Happy Trading.

-Bret Rosenthal

Follow @TheMarketQuote

Well — the Spoos were able to rally out into the end of the day — and to end the week. If you missed the end of the trading session — you missed the final leg up and HOD for the session in the Spoos (ES). The title gives away todays “trading blog”… I trade the S&P 500 — and when I trade the minis, I prefer to use weeklies to manage my RISK. Keyword being – RISK.

The Spoos are one of the most widely traded futures in the universe — that being said, this is why they “move” they way that they do, many eyes and participants around the world trading the same thing… While most people were focused on the December contract for the ES (as roll is approaching here), I was still focused on the September contract. — This is because I was trading the Spoos through the ESU5 (wk2) weekly options. With the ability to trade the weeklies (every 7 days lol), it creates an unbelievable amount of leverage and volatility for the ES, especially come expiration time (as we saw today, and every Friday).

Most investors look at the market so simply; “it has to go up because that data was good” or “there is insider buying, stock will go up”, — those two hypothetical outlooks are not very far fetched — but as “simple” as it all sounds, the market is not that simple. *This brings me to my point of todays post, — MARKETS DO THINGS FOR REASONS MOST INVESTORS/TRADERS AREN’T EVEN THINKING OF…

What does this mean you may be wondering?

Basically– this means that although we are always looking for the “obvious or simple” explanations as to why the market DOES or SHOULD do something — the true catalyst is usually a COMPLETELY different reason. So, the same concept mentioned that we had weekly ES options expiring today at 3pm… THIS is the reason we had our final leg up into the close and through the 3:15 close for ES. It’s easy for the markets to move when traders can leverage up and define their risk (EVERY WEEK!)… So basically, we have an opportunity to move BIG, and QUICKLY as we approach the end of every single trading week (assuming there are options expiring because most products I trade have weeklies). So although AAPL was bid basically since the open, and really started picking up steam into the end of the session, I wanted to say “this was the reason that the ES ended up rallying (and it’s the obvious part of it) — but it was really the ability for traders to manage their risk (so efficiently and not costly) that gave us the ability to Move the way we so often do, especially into option expiration Fridays.

So by using the weeklies — I was not only able to scalp ES to the upside (but I could do it with defined risk, and for free based on the put spread I sold to pay for my put protection as I was long ES future/option. Just like any “trade”, the more I focus on the weeklies, the more I learn about them, and the better I manage my risk as I speculate in the S&P 500 every week.

Besides the positions I consistently manage in Gold GC and Crude Oil CL — The ES is my third most traded product, and it is quickly moving up my preferred list (because of the ability to trade weeklies).

So I choose to focus less on the “analyst noise and old trader tales”, and I study more and more – into the mechanics and boring stuff that REALLY makes markets move!

Let’s try again next week. Have a GREAT weekend! – Happy Trading.

-Bret Rosenthal

Follow @TheMarketQuote

Continuing on the conversation from yesterday’s post — The key is to ensure that you can set-up your risk in order to stay in your trade (long enough to validate your conviction)… That being said, if you are a retail trader (and most of us are), being long, long anything — You were tested today.

What a great rally in the ES, this morning, we traded as high as 1992 on the Spoos… at that point, I had to take some of the “long stockmarket” trade off of the table– so I did. — Then a few hours later, the trader that I am — had to get long again as we were below 1970 — now we are lower, and I’m back in it. That being said– I am in it, the trade is still on, its live, its unrealized, I had my earlier trade, now I have a new basically long delta position in ES.

While the ES continues to be a “falling knife” on a day like today for example, I fortunately have been able to protect my “shots at being long stocks” by paying up an owning protection. Basically I am paying to play — sure I can lose the premium, and it can take away from my profits, but I pay for the PUTS because it keeps me in the game. Being long ES for example, you could easily “blowout” even on small size, when we have 50pt intraday swings (on the regular). So for me — I can either pay to play, and pay up for the PUTS, or I won’t be playing at all. Trying to scalp the ES with a tight stop right now is not going to be my approach, I am swing trading between a usually bullish stance on the stock market. (Which has been the greatest creation of wealth as I look around at the oldest bulls I know)… These days, with technology and now all these new forms of leverage, – things move faster than ever – I think its better to be safe than sorry, and define your risk before EVERY trade.

Lastly, I don’t often talk about individual stocks, but I am eying the big elephants in the room in AAPL and TWTR. (Especially while I try and corner the ES)… When I look at these two very different and unique companies (in addition to similar blue chip names) I see a lot more upside than downside, — it may not be clean/pretty — but if those stocks have more upside, I would think the Spoos (ES) has the potential for higher trading again. The other spot I am looking at to get an idea “IF” the ES can rally back is commodities (Gold GC and OIL CL) — Everyone keeps talking about the global focus, especially Asia’s influence, if this is the case, I will be looking at the commodities for the next “buy signal”, until then I will be paying to play – waiting for the rally and staying in the game. You will always be thankful for having protection — without it, I don’t see it as “realistic” to live to trade another day. Ha… how else do you expect to catch a possible turnaround in (Gold GC and Oil CL)…

*Either you could have made more, or you’ll be thankful that it saved you, it’s a good problem to have. Just need to get past the “paying to play” concept.

In this case, in some of these particular set-ups I mentioned, I am thankful that it saved me, and ideally giving me the opportunity to, maybe if I’m lucky — I’ll be complaining I could have made more soon!

Let’s try again tomorrow. – Happy Trading.

-Bret Rosenthal

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Too often people out trade / over trade themselves — and usually into losses… It’s not the market that beats them, its themselves! I have learned that myself in the past, but I am borrowing knowledge from Jesse Livermore as he is quoted in his unofficial biography Reminiscence of a Stock Operator.

“The reason is that a man may see straight and clearly and yet become impatient or doubtful when the market takes its time about doing as he figured it must do. That is why so many men in Wall Street, who are not at all in the sucker class, not even in the third grade, nevertheless lose money. The market does not beat them. They beat themselves, because though they have brains they cannot sit tight. Old Turkey was dead right in doing and saying what he did. He had not only the courage of his convictions but the intelligent patience to sit tight.”

PATIENCE. DISCIPLINE. THE ABILITY TO BE COMFORTABLE WITH DOING NOTHING, AND USUALLY WAITING FOR “IT” TO PLAY OUT. — I am reading this newer version of Reminiscence of a Stock Operator, and I can’t help but relate almost every famous quote, or even the random stories, to some of my own. Clearly I am not swinging nor experiencing the identical moments described in the book, but I have my own versions throughout my own career thus far. *Anyways, the point of this quote is to “Stay in the game, — to live to trade another day, and to catch (profit from) your convictions”, which I talk about so often here.

We are trading Futures, the name is giving it away, focus on the future. While we manage risk in the present time, and it matters right now — the game is designed looking forward, where will we (and your risk) be in 5 min, 10 min, a day or so? It is less about being right “immediately” and more about figuring out “how can I manage this position based on my bias for that particular product”. — I wanted the stock market to rally last week, I thought we would bottom, and I could leverage up the position into the end of that week, but the market doesn’t care about me, so it was my job to figure out, “how do I stay in?” Since this is the way I set myself up, I would have loved it Friday, but I will not complain about getting the second best day of the year for stocks a session late. I am still in.. *So today I was long ES, and I knew my risk as I had owned the outright future ES, and front month 1895 put, (which I rolled up to 1925 strike), basically long synthetic calls (long deltas in ES). — I wanted to buy when we were low, which I did, and I can manage my risk accordingly throughout the entire trade, that being said, this is risk capital, and if I am wrong, I am willing to lose what I can there based on the strikes and outrights.

More importantly, I didn’t miss the move in Copper today. This is the move I have been waiting for. The Doctor (Dr. Copper) was finally resilient to the upside — we had the best day of the year for HG and we are still at “low levels” for recent time. IMO – being able to lean on the strength in copper, made it “easier” for me to trade Crude, ES, Gold, and risk/commodity currencies like CAD/AUD/NZD.

The key is, to not bust yourSELF out of the trade, stay in the game! Live to trade another day, — this is only possible if you learn from your mistakes and continue to sharpen your skills, always, constantly. The future markets are more Darwinian than they have been in a long time again, volatility is creeping back in, we have extreme rate rumors, and even the best traders/hedgers/banks in the world are “re-tooling” their approaches in the Futures Market. Make sure to continue to adapt with it, and keep yourself in the trades you BELIEVE IN. This way, when the bottom or top, or continuation you have been waiting for begins to blast off, — you aren’t stuck chasing alpha (and reporting old news/prices) with all the other Monday morning Quarterbacks, or in this case Tuesday Morning QB’s.

Manage your risk, and wait – let the market WORK for you.

Still waiting in Crude / Gold. In the meantime, I am sitting back and letting the MARKET work for ME.

Let’s try again tomorrow. – Happy Trading.

-Bret Rosenthal

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