Money Talk Daily

Archive for the ‘Trading the E-Mini Futures’ Category

Again, there’s just no a whole lot to be said about today’s action in the gold futures market. It’s pretty clear that some shorts are open for business at $1,800, so that’s the number for gold longs to beat – for now. This chart, in the very short term, is all about indecision.

Having jumped on this latest move by going long in late October, I’m not unhappy with the current price action. It is nice to have volatility settle down a bit, although I don’t expect that to be the rule going forward. At some point this brief – so far – consolidation pattern is hanging around that 61.8% Fibonacci line like it’s sort of a price magnet. None of this is going to last forever.

With governments around the world doing what they do best – obfuscate, endlessly debate, postpone crucial decisions, and print gobs of money – it’s hard not to be partial to the noble yellow metal which stands as a resource against monetary depredations.

Continued turbulence, both economic and political, took its toll on precious metals in the past 24 hours. As I’ve commented many times here, this will be the rule of the day going forward. If your futures trading account size does not allow for this sort of volatility, you are going to find yourself getting in and out at all the wrong times.

Anyway, gold has experienced some weakness these past couple of days, bouncing off the 75-day moving average, but it’s still hanging around the 61.8% Fibonacci line. Let’s see what happens the rest of the week.

Did you enjoy all the confusion and near panic resulting from the late Friday news release from the CME regarding futures margin requirements? Fortunately, we got clarification on Saturday. But this just gives those of you who are new to futures trading an idea of the knife’s edge on which much of these markets are perched. This is not easy work.

Anyway, check out that nice big white candle that gold longs got today. Right through another Fibonacci retracement line and well above those moving averages. All in all – good action that makes e-mini gold longs happy.

(Click chart for larger view.)

Let’s take a break from checking out gold charts to have a look at silver. Of course, silver typically exhibits much greater price volatility than does gold. And recent history bears this out.

As much as I like silver, from the perspective of a short- to medium-term trader, the chart tells me that there’s not enough strength at this time to go long. I would prefer a bit less weakness before putting my money on the table.

What weakness?

• Silver bumped against the 50% Fibonacci level and faded.
• The 50-day MA is still declining significantly.
• Price is below the 50-day, 150-day, and 200-day moving averages.

I’d be a lot more confident going long in the range of $30.00 to $31.00, a price that this chart tells me might be revisited in the near future. Could silver take off from where it is now? Sure, but the likelihood of a pull back to $30.00 is significant enough to put me on the sidelines – for now.

Nothing to make gold longs unhappy today. It cleared its 50-day and 75-day moving averages and the 50% Fibonacci level, making a run toward the 61.8% Fib level. Greece is certainly adding to the confusion and turmoil. Is gold taking on the characteristics of a political hedge, too?

(Click on chart to enlarge.)

What does a gold price level that’s near the 50-day MA, the 75-day MA, and the 50% Fibonacci retracement line give you? Oh, and add in plenty of political & economic uncertainty in Euroland. The answer is indecision in the gold price. Happily, we did see gold close above all three of those points I just mentioned. But if we’re going to see a run to $1925, it’s going to need to break out of this zone convincingly, turning the 50-day MA up which should attract more longs.

(Click chart below to enlarge.)

Gold got whacked today, then found support right where you would have hoped it would. It then finished the day up just a bit. Not bad action, although the $40.00 dip would be enough to maybe shake out some new longs. Let’s see what tomorrow brings.

(Click chart to enlarge.)

All the long gold futures traders got today for Halloween was a lump of coal. Cause? Japanese fiddling with the Yen is a good place to start looking. Let’s see where support comes in.

(Click chart to enlarge.)

For each gold e-mini you were long this week, post break-out at around $1,700.00, you’re up about $1,500.00. Have nice weekend. Don’t get greedy. Should be more good times to come.

(Click on chart below to enlarge.)

Considered very bullish, gold has now closed above its 50-day moving average. Rest assured that the hedge fund community has not missed this.

The likelihood of a re-testing of the highs has just increased. Rumors of a possible QE3 in the not too distant future can fuel the rise as well. In any event, if you’re bullish on gold – either physical or emini futures or both – there’s a lot to like about that chart, although you might not like the price inflation that heats up with expansion of the money supply. But that’s one reason we’re precious metals investors, right?

(Click on chart below to enlarge.)

Sticking to my program of keeping the technical analysis stuff simple (does it really help to light up every technical indicator available?), here’s a chart of gold price action as of end-of-day today. Could we be getting a double-bottom bullish pattern here?

Well, it will be interesting to see what happens around the $1685.00 area!

(Click on chart for larger view.)

Well, what do we know?

1. Gold and Silver are not yet ready to break out to new territory.
2. Those who jumped the gun and went long gold e-minis as gold was trying to break above $1680 are unhappy.
3. Patience and properly placed stop orders are good.
4. We cannot expect every trade to be a success.

Nothing like keeping it simple sometimes, huh?

Interestingly, gold came close to touching the 150 day MA today – just about where it bounced a few days ago. Does that mean that point will hold this time? Well, that’s what we don’t know. So, unless gold craters tomorrow, it looks like we’re still in the trading range…

(Click on chart to enlarge.)

All this waiting can drive one crazy. But here’s another lesson: never try to “force” a trade. If your set-up isn’t there, it isn’t there. Best to sit tight and wait for the market to talk to you.

Still doesn’t make it any less frustrating when the market is stuck in a trading range. Of course, there are options strategies that work well in a range-bound market. But that’s for a different blog!

Click on chart for larger view.

One crucial element of my trading strategy focuses on the sizes of the positions that I take. It is abundantly clear that getting this right plays a major role in investment success. In an industry in which buying at the right price holds overwhelming emphasis, this emphasis on position size may seem strange – and to some, almost irrelevant. However it is anything but.

Enter the e-mini which makes it possible to scale in to a position – something that would not be possible for a relatively small investor such as myself if the full-sized futures contracts were all that was available.

If you have not given a great deal of thought to how large each of your positions should be relative to your entire portfolio, then I suggest you make such a study a top priority. One place you can find more information on this topic is in Van Tharp’s books which you’ll find in my Amazon store. But however you approach the issue, give your position sizing some thought. I think you’ll find the time you spend to be very worthwhile.