The Trend Knockout In Energies
Each evening we focus on the most interesting aspects for the upcoming trading day. The comments are based on observations of the nightly updates of the Futures and Market Bias pages. They are provided for educational purposes only and are not intended to be direct trading advice. Also, keep in mind that these remarks are made up to 12 hours in advance of the markets opening. Therefore, overnight events may alter the outcome of these observations.
At the time this is being published , the S&P Globex Futures are trading .50 points lower and the Bond Market Futures are up 4 ticks.
On the Pullback Off Highs List, the energies, May Crude Oil [CLK9>CLK9], May Heating Oil [HOK9>HOK9] and May Unleaded Gas [HUK9>HUK9], sold off sharply today. This sell off during a strong uptrend is a pattern I call a “Trend Knockout†(TKO). It essentially knocks out the weak hands and often clears the way for the contract to move higher. Therefore, these markets are worth watching over the next few days for a potential buying opportunity. However, don’t be a hero, wait for them to recover (i.e. take out today’s high) before attempting to enter.
On the Momentum 5 List, the June Canadian Dollar [CDM9>CDM9], closed well today and looks like it has the potential to resume its uptrend.
May Pork Bellies [PBK9>PBK9] have turned back down after rallying off of recent lows. Look for a shorting opportunity here.
Best of luck with your trading on Thursday!
Dave Landry
Director of Research
TradingMarkets.com