What will move Crude Oil… (*Not the Dow) – Draw on CL Supply?

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Well… Most people are talking about how the Dow Jones could rally up 600 pts, and I can’t stop staring at the Spoos ES moving 10 handles every couple minutes. I sat here feeling confident that we could easily bounce and finally rally higher, as we did all night again, and finally — this time WAS different. We didn’t tank into the end of the day I mean (we ripped up huge, finally squeezing the shorts), *now the real question is, but what happens tomorrow. —- I will constantly use rhetoric to stress that futures are a market focused on what will happen next, not what happened in the past. So with that being said, if you were long the ES today, you made great profits on a 1 lot, if you weren’t, hopefully you weren’t very short. But, that is the past, the trade is done, the move is gone. Let’s move on. — by the time I finish writing this, if you don’t already know what happened in the stock market today, there is your first issue. The headlines popping up on my iPhone are passive, they are old news, the trade happened.

I don’t want to talk anymore about the Dow, I don’t have a position in it, and the record rally opportunity — just took place. But tomorrow there will be new trades to take, even today starting at 5pm.

I want to talk about Crude Oil — When I first started trading futures, there was nothing I feared more than the concept of “shorting crude oil”, that being said, that was the past, and we are focused on the future. So clearly, with the CL trading below 39 a barrel, with record bearishness and everyone screaming we could still go lower. — As a trader, student of finance/markets/economics: I am wondering or dumbfounded how we have still not found “a bottom.”

The number one argument I keep hearing regarding oil is “supply”, people continue to ignore the headlines or other factors that should or could make oil pop higher, and so I would think that until the “supply” story can be exploited otherwise, that argument will keep oil offer.

Well last night we had the biggest inventory drawdown since 2014 in Tuesday API, when it reported unexpected 7.3 million-barrel drop in crude supplies! *Analysts forecasted an increase of 1.9million…

Followed by today, we had EIA results surprising even the whisper # with US DOE Crude Oil Inventories (Aug 21) W/W -5452K vs. Exp. 1450K!

So if the argument is “supply”, yet again, we get draws and surprises to counter than like we did in the past 24 hours with API and EIA… WHY WOULDN’T CRUDE OIL CL BE ABLE TO EVEN END IN THE GREEN, LET ALONE UNCH? *it even almost settled on LOD.

The distillates are clearly not helping, and people are looking at the USD strength, but when the Dow Jones rallies 600 pts and Crude Oil can barely bid higher *after data supporting “maybe we don’t have quite as much over-supply as we thought.” I ask again: WHY WOULDN’T CRUDE OIL CL BE ABLE TO EVEN END IN THE GREEN, LET ALONE UNCH?

So, now where does CL go tomorrow? What will make it move? Take a look at the futures at 5pm and let’s figure it out.

Let’s try again tomorrow. – Happy Trading.

-Bret Rosenthal

Timing: Traders and investors are NOT feeling ‘saved by the bell’

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Ding! Ding! Ding! – Although, again traders and investors are NOT feeling ‘saved by the bell’… If you called the “bottom” today – It would have had to have been at the 5pm futures open yesterday, or around 1am (while asia-europe traded). We had an over $3000+ move per 1 lot of any of the E-Mini Stock Futures markets – BUT IT WAS OVERNIGHT.

That being said, today, as US Traders came into the market, sure there was a couple of points left to the upside for you to eat like a bird. BUT – just like Friday and Monday sell offs into the close — stocks get slammed again, and your crapping out like an elephant. I agree, stocks will “rally higher again”, but they already bounced overnight, be ahead of the moves, or wait, nobody wants a Monday morning QB.

— Why? —

The answer: “Who cares.”, try not to think, but to trade it. If you are focusing on futures markets, the name of the game is right there — we only “care” about the future. So- it’s best not to get caught up and wrapped up around “Why?” the market is up or down 50pts in a hour. It’s okay to be conscious of where we have been, but focus on WHERE ARE WE GOING NEXT?

If you have ever traded anything before you know “timing is everything”, just like an option has its factors regarding timing, and even just buying or selling stock outright (with no leverage) timing clearly matters — So I think the most important lesson that can be learned today again is just that. Don’t be in a rush to get a trade on, don’t think you will miss the trade or miss out on easy money.

It does not take big size in a market where the VIX is moving 5+ vols and the minis are moving in 3-4% swings. — It takes timing.

I know it is easier said than done, but with these dips, typically “bring in new money or new traders/investors” who have been waiting for an opportunity to “buy stocks”. But as you see, we aren’t going to recover overnight or by the 5pm open, it will never stop moving — All you can control is WHEN you are going to be in and out, so focus on that, define the trade, and then execute it.

Personally I am watching/using the stock future market swings as an indicator / proxy for my other trades. (I’m not going head on against this… yet.), I’m focused on oversold commodities and markets that could show inflation LT. BUT: As for this current “crazy” stock market – When the moment or timing is right, I take my best set-ups and take small trades between the large swings.

Let’s try again tomorrow. – Happy Trading.

-Bret Rosenthal

FREE Short Stock Swing Trade of the Day: COH 9.17.2013

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Chart Key Emini SP500Coach Inc (COH) is a marketer of accessories for men and women. They provide consumers with a range of accessories including leather goods, handbags, watches and fragrances. The stock is currently trading around $55.40 in a 52 week range of $45.87-$62.26. The stock has been relatively weak this year, selling off around 0.25% year to date in a broader market that is much higher. COH is even weaker over the past 12 months down nearly 11%. Recent bearish order flows in the options market also suggests that sentiment on COH is for more downside. Current open interest put/call ratios are also very bearish at 1.58. Still trading in neutral to bearish territory on the Ichimoku Cloud we believe that COH sets up well at this level for a swing trade.
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Biggest Bullish Activity 9.12.2013

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We define unusual option activity as large block trades that represent a large percentage of daily option volume. The block trade is considered “unusual” if the option volume is above the average daily volume over the past 22 days. At KeeneOnTheMarket.com we scan and analyze order flow from all of the major options exchanges in order to identify any unusual option activity.

Analyzing unusual order flow gives traders a window into what the positions that large institutional players have. The majority of unusual option activity can be traced back to hedge funds, mutual funds, and other large institutions. Knowing where these institutions are placing their bets can be hugely advantageous for any trader. These institutions have informational and technological advantages that the average trader doesn’t have, and the amount of time and analysis that goes into every one of their trades is substantial. We offer this service through our 7 hour daily LIVE trading room http://bit.ly/135QWt8 or through Premium Twitter feed with all entries, exits, and unusual options activity tweeted all day long: http://bit.ly/11f0L9u .

Order flow can however at times be deceiving. One might logically think that a large block buyer of calls is bullish on the underlying. This is not always the case. Remember that a large number of participants in the equity options market are hedgers. Long calls are a hedge against short stock, and long puts are a hedge against long stock. With this in mind we have developed a 7 step trading plan that helps filter out unusual option activity that will not provide actionable trade setups. It is by using this plan that we are able to identify the most significant unusual options activity trades every day.

Biggest Bearish Activity 9.12.2013

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We define unusual option activity as large block trades that represent a large percentage of daily option volume. The block trade is considered “unusual” if the option volume is above the average daily volume over the past 22 days. At KeeneOnTheMarket.com we scan and analyze order flow from all of the major options exchanges in order to identify any unusual option activity.

Analyzing unusual order flow gives traders a window into what the positions that large institutional players have. The majority of unusual option activity can be traced back to hedge funds, mutual funds, and other large institutions. Knowing where these institutions are placing their bets can be hugely advantageous for any trader. These institutions have informational and technological advantages that the average trader doesn’t have, and the amount of time and analysis that goes into every one of their trades is substantial. We offer this service through our 7 hour daily LIVE trading room http://bit.ly/135QWt8 or through Premium Twitter feed with all entries, exits, and unusual options activity tweeted all day long: http://bit.ly/11f0L9u .

Order flow can however at times be deceiving. One might logically think that a large block buyer of calls is bullish on the underlying. This is not always the case. Remember that a large number of participants in the equity options market are hedgers. Long calls are a hedge against short stock, and long puts are a hedge against long stock. With this in mind we have developed a 7 step trading plan that helps filter out unusual option activity that will not provide actionable trade setups. It is by using this plan that we are able to identify the most significant unusual options activity trades every day.

Unusual Option Activity 9.12.2013

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We define unusual option activity as large block trades that represent a large percentage of daily option volume. The block trade is considered “unusual” if the option volume is above the average daily volume over the past 22 days. At KeeneOnTheMarket.com we scan and analyze order flow from all of the major options exchanges in order to identify any unusual option activity.

Analyzing unusual order flow gives traders a window into what the positions that large institutional players have. The majority of unusual option activity can be traced back to hedge funds, mutual funds, and other large institutions. Knowing where these institutions are placing their bets can be hugely advantageous for any trader. These institutions have informational and technological advantages that the average trader doesn’t have, and the amount of time and analysis that goes into every one of their trades is substantial. We offer this service through our 7 hour daily LIVE trading room http://bit.ly/135QWt8 or through Premium Twitter feed with all entries, exits, and unusual options activity tweeted all day long: http://bit.ly/11f0L9u .

Order flow can however at times be deceiving. One might logically think that a large block buyer of calls is bullish on the underlying. This is not always the case. Remember that a large number of participants in the equity options market are hedgers. Long calls are a hedge against short stock, and long puts are a hedge against long stock. With this in mind we have developed a 7 step trading plan that helps filter out unusual option activity that will not provide actionable trade setups. It is by using this plan that we are able to identify the most significant unusual options activity trades every day.

 

REN Covered Call 9.12.2013

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In Q2 this year, the company’s average production was 13,107 BPOD, 78 percent of which was crude oil.  Resolute’s production assets are based in North America, so there is little risk from exposure to  unrest in the Middle East or other disruptions of a geo-political nature.  Included in these assets are operations in North Dakota’s Baaken reserve.

Yesterday, we saw Paper sell 2,500 REN Dec 10 Puts for $1.80 (27 times unusual volume).  By implementing a covered call strategy, or a ‘buy-write,’ a trader is synthetically short a put.  

To set up this covered call strategy a trader is going to buy 100 shares of stock at $8.30 for every REN Dec 10 Call sold at $0.20. This trade is profitable anywhere above $8.10 and if the stock closes above $10.00 on expiration this trade will net an annualized return of 97.5%.REN_Covered_Call.png