The US equity markets continue to move sideways within the trading ranges that have formed over the last several months but it is worth noting that the SPY ($SPX) is now sitting precarious close to the bottom of its 3 month trading range which runs from about 198 up to 209. The QQQ ($NDX) although trading lower today, is still slightly above its similar trading range, albeit, by a slightly larger margin the the SPY. Both trading ranges as well as several other technical developments on various time frames where discussed in detail in the U.S. Equity Market Overview video published [...]
USO 60 minute Jan 22nd USO (crude oil ETF, along with UCO, the 2x long crude ETF) is current trading at the bottom of the recent trading range although we now have double positive divergence (back to back bullish divergences) on the 60 minute time frame. Those divergences would still remain intact should USO make a relatively brief & shallow break below the recent trading zone. In fact, at this point I would almost expect a brief breakdown which could serve as a bear-trap & flush-out move. As the UCO trade is taking longer to play out than expected [...]
These are the latest 60 minute charts on both UCO (2x long crude oil ETF) and USO (1x long crude oil ETF). Based on my analysis of the charts, I still expect an decent oversold rally in crude oil from at or near current levels although in hindsight, I thought that the bounce would have already played out by this point and as such, should have opted to trade USO instead of the leveraged UCO, which has basically choppy around in a trading range since the original entry two weeks ago. Regardless of the fact that crude prices did [...]
As these 60 minute charts on UCO & CL (crude oil futures) indicate, crude has pulled back to support following the recent breakout and thereby offers an objective new long entry or add-on to an existing position (of CL, USO, UCO, OIL, etc...). The potential price targets for UCO remain the same however, stops should be dependent on one's average cost.
The point of this post is two-fold; First, to discuss the pros & cons of employing a flexible vs. rigid trading plan and secondly, to make a quick update on UCO/crude oil. Some traders practice the use of rigid trading plans, whereby they identify exactly where they will book profits or take a loss (stop out) before they enter a position. While a rigid trading style certainly has its merits, my preference has always been to use a more flexible trading plan with many of my trades, often adjusting or modifying my profit target(s) and stop level(s) after establishing a position. [...]
UCO closed 6 cents above the first suggested stop of 7.50 yesterday & is currently indicated to gap just below that level. However, with crude trying to claw its way back from the overnight losses, I plan to wait until 10:00 ET before stopping out if UCO is still trading below 7.50. Discretionary modification of stops or one's trading plan may work for some & not others. As an active trader with the luxury of being in front of a computer most of the trading session, I will occasionally wait until the initial opening order imbalances moderate on a position if [...]
UCO 60 minute Establishing an AGGRESSIVE long position in UCO (2x Long Crude ETF) here around the 8.18 level with any or of these horizontal resistance levels as potential bounce targets. My minimum preferred target will be set just below the 10.58 resistance level with a two-stage stop parameter of 7.50 & 7.10. The final scale-out targets will depend on how crude trades over the next few sessions. Due to the inherent price decay suffered by leveraged tracking ETFs, I typically avoid trading these vehicles for anything but very short-term trades with expected holding periods measured in hours or [...]