This is a sample entry from Andrew Pawielski’s email newsletter, Market Dimensions Advisory, published on November 19, 2015.
For the last 2 weeks, the WTI crude market has been making another run lower. Looking at the January contract, WTI attempted to hit the $50 barrel mark and fell short, only reaching $49.23. I believe the rejection of this psychological number and the obvious over supply concerns caught up with the market and has broken the short term bull’s back. We are now in what appears to be a bear run to hit previous lows from the end of August under $40 a barrel (low $39.97 Aug 24th). It will be interesting to see if we push through or find support. However, for the last 2 weeks, we have been trending lower and the lower trend is targeting $40 in the near future.
Aside from just flat priced futures positions and calendar spreads in WTI crude, I also track the relationship between Brent Crude (think European crude) and WTI (our US bench mark crude). The relationship between WTI and Brent has typically had Brent trading at a higher price. It wasn’t uncommon for this spread to range from a $7 to $5 difference on historical pricing for the same contract month. In recent months, this new crude environment has tightened up, making new highs on November 16th at -1.65 on the January spread. Since those recent highs on a daily, we have pulled back to the most recent high volume area of -2.60. I think that we will gain support at these levels to continue the upward trend and attempt to make a run for new highs. I think this upward trend will stay in play and stay above the 200 day moving average @ -2.38.
Trade Idea: Buy Jan WTI Crude – Sell Jan Brent Crude (dt pro symbol: NSEA-WTI-MF6 -,+)
Entry: Buy Jan WTI/Brent spread @ -2.70
Risk: Stop @ -3.50 Risk 80 cents or $800 before fees
Target: Looking to make a run at new highs -1.60 pricing area
Margin: $1620 per spread
For those who would like to discuss my specific entry of this trade, please reach out to me directly, and we can discuss what entry, stop, number of contracts and target will be best for you based on your risk profile.
If you would like to follow along with more of my trade ideas or know what I am watching in the markets I encourage you to sign up for my free trading advisory, Market Dimensions Advisory, below.
Subscribe to Market Dimensions Advisory
Market Dimensions Advisory - Get Inside the Mind of Commodity Market Professional Andrew Pawielski! The Market Dimensions Advisory leverages Andrew’s own live trading and a career of working directly with professional traders, commercial clients and institutional business. This deep understanding combined with countless hours of technical market analysis have made Andrew proficient with trading execution and the trading process.
Market Dimensions Advisory includes an email newsletter subscription.
dt Pro Futures Trading Software Demo
Daniels Trading’s dedication to providing the premier futures trading software in the industry was driven by our relentless pursuit of satisfying the needs of active traders and offering a trading platform that would truly set us apart in the industry. The result is our dt Pro.
STOP ORDERS DO NOT NECESSARILY LIMIT YOUR LOSS TO THE STOP PRICE BECAUSE STOP ORDERS, IF THE PRICE IS HIT, BECOME MARKET ORDERS AND, DEPENDING ON MARKET CONDITIONS, THE ACTUAL FILL PRICE CAN BE DIFFERENT FROM THE STOP PRICE. IF A MARKET REACHED ITS DAILY PRICE FLUCTUATION LIMIT, A "LIMIT MOVE", IT MAY BE IMPOSSIBLE TO EXECUTE A STOP LOSS ORDER.
This material is conveyed as a solicitation for entering into a derivatives transaction.
This material has been prepared by a Daniels Trading broker who provides research market commentary and trade recommendations as part of his or her solicitation for accounts and solicitation for trades; however, Daniels Trading does not maintain a research department as defined in CFTC Rule 1.71. Daniels Trading, its principals, brokers and employees may trade in derivatives for their own accounts or for the accounts of others. Due to various factors (such as risk tolerance, margin requirements, trading objectives, short term vs. long term strategies, technical vs. fundamental market analysis, and other factors) such trading may result in the initiation or liquidation of positions that are different from or contrary to the opinions and recommendations contained therein.
Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts or commodity options can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results.
You should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources. You should read the "risk disclosure" webpage accessed at www.DanielsTrading.com at the bottom of the homepage. Daniels Trading is not affiliated with nor does it endorse any trading system, newsletter or other similar service. Daniels Trading does not guarantee or verify any performance claims made by such systems or service.