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Friday, June 8, 2018

JUST ANOTHER INSANE DAY IN CRUDE OIL

“Damn! ... you trade Brent crude oil to? ... what are the odds?”

Nothing is ever “safe” in crude oil, specifically Brent … especially in a quiet 
market that appears to be drifting … somebody somewhere is always plotting 
some shit, to take stops out via the high or low, like some war time raid on an 
unsuspecting enemy. “This is the wrong place if your expecting the tiger to lay 
down with the gazelle, and can’t we all just get along”.

The day starts out with a higher open in Asia, where after the opening minutes, 
it’s pretty much straight down the entire night into my arrival around 
4:30 A.M. EST … it’s Friday, with a G-7 meeting in Canada that’s got the 
world’s attention, and there isn’t anything going on except the NASDAQ got 
“monkey hammered” on some bad Apple news in Japan … outside of that, it’s 
“dullsville”, with some minutes not even seeing but one or two bid price 
changes it’s so slow … then, things start to pick up, but no real flow to things as 
price is just chopping around.

Only one long trade today … PAMM up slightly on a “strong” algorithm buy 
signal … when it won’t go and just sits, you got to pull the plug.

I get the price I want on the buy signal, but after I’m in, it takes over 10 
minutes to get me out of the damn spread, which by the way today was a great 
3 cents all day long … 1 penny up, 1 penny down, sit and do nothing for 20 
seconds, rinse & repeat … enough of this, I just want to be out … I’ll come 
back later when things pick up.

“Well, that escalated quickly to the downside, didn’t it”? … and then out of the 
blue, right off a short term high, comes a 9 period M5 that goes down straight 
approximately 85 cents per barrel … “it’s Thelma & Louise” and you’re in the 
back seat … what a ride”. Of course, after it’s over, it’s straight up and then 
sideways into the New York afternoon with a slight drift bias to the upside 
… just enough to squeeze some shorts from the mini meltdown.

Not really much of a range for the European & U.S. trading sessions when you 
take away the mini plunge from nowhere … by the time Europe opened and I 
sat down to trade, Brent already had a 90 cent range … and now, having once 
killed longs with the first mini meltdown, and then rallying all the way back up 
about 75 cents off the low, here comes the second meltdown … this time in 4 
minutes from the 70’s to the 20’s, “thanks and have a nice weekend” from 
whoever that started the panic … like I said, “Turn your back on this stuff at 
your peril, cuz there is no such thing as a safe trade”. All told on this insane 
Friday, we’ve had 6 trend changes on the directional signal indicator, with 
trade signals about half way up both up & down moves, which gives us very 
little room to maneuver a position.

The one trade I made today, it looked for a second like I liquidated it too early, 
but after going about 5 more points higher, it got mini “monkey hammered” 
some minutes later, and it appeared to me “chop” was going to be the flavor  
du jour for today’s trading, and who wants that?

As with every single version of every algorithm I’ve ever developed, not getting 
seriously “whacked” is the first priority of trading … today’s “chop” action, 
after our first trade, saw Brent price & algorithm signals at “loggerheads” over 
direction … meaning, algorithm says “get long now”, but price has already 
rallied, or algorithm says “sell right now” but price has already collapsed 
“you gonna really buy or sell in the hole when trading Brent, to the tune of 
greater than 20 - 30+ cents? … are you nuts”? So, in that regard, the algo kept 
me from making bad decisions; decisions in a “chopfest” you don’t want to be 
making … when your smack dab in the middle of a choppy market, it isn’t the 
time to be asking for directions!

Of course, over long periods of time everything has to be seen in the 
marketplace, but nobody sends us an email telling us the day will be “officially” 
a bag of warm bat guano before it takes place, and that today is gonna be that 
day … here at 3 P.M. in New York, after almost 11 hours of trading, all we got is 
an 85 cent range, tip to tip, with the market sitting in the low 30’s … “yup, that’s 
a doji in a smallish range (smallish for crude), and that’s gonna be trouble, cuz if 
you start getting multiple signals quickly, that’s your first warning flag up the 
flagpole that something is amiss” … and boy, has today been one of those  
“amiss” days.

And so, you always have to be aware of these kinds of days, and then back the 
hell away before any damage is done, cuz in Brent, it will be fast and it will be 
vicious with very few if any accounts not totally unhappy … we were there 
today when it counted, but the market had other ideas … tomorrow’s another 
day.

All told, I played the only decent buy signal the way I should have … get in, give 
it some room, but when it fails to go higher on multiple attempts and then gets 
taken down quickly in price from a small move up, it’s time to liquidate and 
then look for the next signal if and when it comes. In the final analysis, not 
disappointed in today’s trading … it’s a useless, worthless day … I’m outta here 
for a cold one, maybe two …. This weekend I’m working on the Brent trading 
manual … until Monday mi amigos … Onward & Upward!!

PAMM Spreadsheet directly below.


Have a great day everybody!

-vegas

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