Trading RM, LLC.

Thanks to senior trader Michael Osacky for some technical analysis of the "in play" biotech sector. Trading RM has been able to profit from this sector lately and Michael shows you some of what we look for.

Today the USO broke a major trend line going back to mid July after a sharp sell off in China lead the Shanghai Composite to drop over 6%. Traders are wondering if the declines in the Chinese markets will lead to another bear market here in the states. Traders should watch oil prices closely as much of the U.S. rally was attributed to the "bull market" in China and their aggressive purchases of commodities. Below are key levels to watch on the USO on a closing basis.

A lot of being a trader involves patience more patience and the ability to mentally survive slow periods in the market. Being a trader one can become almost addicted to trading, you can not for the life of it tear yourself away from the computer even in the slowest times for fear you will miss "the special trade". I felt this way today, as AIG made another monster run i was away from my computer thinking, "if i was only at my computer i would have crushed it". I cannot dwell on this, every trader needs time off to refresh and regroup. Sitting a computer for 6 hours a day sometimes churning 100 tickets can become maddening when things are not trading like you expect. As fall approaches more and more 5 star trading opportunities will present themselves, we will probably not see trading like last fall (in the back of my mind i hope we do), but any increase in volatility will help fire up the motivation to trade aggressively. Aggressive trading is where the money is made, knowing when to be aggressive is almost as key as knowing what to be aggressive in. The only trade i have really seen this summer which has paid to be aggressive in is AIG. Other than that you would get burned over and over trying to capitalize on names you have convinced yourself were 5 star when in reality they were 1 star. The mystical false 5 star has burned many a traders, this is the trade that looks like 5 star just because its the only thing trading in a stagnant market, but in reality is really 1 star. A good trader should know about this phenomenon, and eliminate its influence on the traders mind. This brings me back to trading psychology, if you want to be successful as a trader you must know when to let off the gas, step back and refresh. Whatever that maybe, a vacation, two days off, a half day off, or even a week, when you come back to your desk you will be refreshed and ready for the next move. Frustration should hopefully be released, if it is not then you probably should take more time off collecting yourself. From my own personal experience you can convince yourself through negativity you cannot win when the market presents no opportunity. I have seen this in myself, and through other people on the floor, traders who sit next to each other on the floor can feed off each others negativity, this cannot go on for long or you will convince yourself every trade is a bad trade. If you do this you will never win and will nickel and dime you account down to nothing.


Traders what i want you to take away from this is, you do not always have to be in the market, you must get over the fear of missing the big trade while you are away from your trading desk. It took me quite sometime to figure this out the hard way, as i at the did not have very supportive superiors who would not tell us to take time off, come back refreshed and ready to take on the second half of the year. My current superiors (which are great BTW) have really pushed us on the floor to take advantage of slow trading by refreshing ourselves. Hopefully this will convince you as a trader to no listen to the demons in your head telling you not take that break you so very much want. My break is over Monday, i will post an update on my mood, I'm sure it will be much more motivated to go out and make the right trades.

During today's trading session the S&P 500 put a new a new intraday high in since the beginning of the rally, which began in March. The markets were not able to close near their highs as selling pressure entered into the energy sector bringing the broader markets down as well. Below is a sector heat map courtesy of finviz.com


XOM broke out of its symmetrical triangle to the upside and tagged the 200 daily moving average only to sell off afterward and closing back under resistance within the triangle. Traders should focus on the US Dollar Index and the Department of Energy numbers which will be released tomorrow morning as a good way to gauge commodity stocks which represent a sizeable portion of the S&P 500. Good luck trading.

Energy stocks continue to lead the markets higher as the OIH broke out to the upside of the symmetrical triangle it was trading in. On Friday the OIH gapped above the triangle's resistance and has since rallied nearly $4.50.


Today, XOM rallied nearly 2% and is now facing some major resistance at the top of it's symmetrical triangle formation and if it breaks out to the upside the 200 moving average on the daily chart will be next target. XOM is the largest stock by market capitalization in the S&P 500 Index and should be watched as a gauge of the market.

Gap up, some one-off names had good trades, but overall, pretty slow

• The “Trading RM" oscillator is still trying to break the downtrend line. It came right back to it on the close, after being well below most of the day. A big down move will likely see the oscillator stay above the downtrend line, which is a definite sign the market is loosening and might be time to get more aggressive.

• “Future(s)” gapped up a small amount, followed by some continuation to the upside. Market made new rally highs on the S&P minis, only to sell off and find close from Fridays levels. Tomorrow will likely be mixed action given the slowness and light volume in the market.

• “Range” was below the recent moving average at 14. Market had a slow grind up on decent, while the sell-off seemed to have more volume. The range oscillator suggests the downside may take a bit to come, a move back to the recent range is likely, but a possible push to upside is there.

• “Going Big” was weighted slightly to the downside percentage when compared to upside. This suggests market is again mixed and uncertain. Possible continuation to the upside, but indecision seems to be the name of the game right now.

• “Gap DaP” had continuation, and from recent history, the last time the oscillator registered these numbers, a gap down with continuation occurred. Granted small sample size, so be nimble.

Still August trading, which is usually slower.

Good luck and Great Trading.

Today is option expiration, the 3rd Friday of every month IF you were not aware. Magical things can happen on days like today, you can buy up the cheapies with size, only to sell them out for huge gains as the underlying moves towards your speculative strike. For me option expiration is just that, low risk/high reward speculation. Another tricky cog in the wheel to profits is time value, which is zero, only intrinsic value and Vol are factors in price. So when you see so many options trading at seeminly low prices, this is why. My primary focus is going to be in high beta names i know can move, like GOOG, AIG, AAPL etc. If AIG can move like it did yesterday, there is no reason why you would not snap up the 40 strike calls, or vise versa, pick up the 25 puts (IF and only if AIG exhibits price action indicative of a move like we have seen). Im sure there is going to be some pin risk associated with many names, this is where the underlying pins to the strike with the most open interest. July's expiration was fairly eventful, with IBM being in play, along with lots of takeover chatter and other market moving news. Since this is late August, i will be a bit less aggressive unless price action presents itself.

Please visit www.chicagohuddle.com to vote for Trading RM's Shae Peppler to be the 2009 Chicago Huddle spokesperson. You can vote up to five times.


About Chicago Huddle:

ABC 7 sports reporter Ryan Chiaverini, is joined by alternating Chicago Bear co-hosts Desmond Clark, Adewale Ogunleye and Jason McKie to kick off a fun, entertaining and different kind of football show, THE CHICAGO HUDDLE, airing Sundays at 10:30 AM during Bear season. Desmond Clark will join Chiaverini as co-host when THE CHICAGO HUDDLE premieres in its second season on Sunday, September 7th on ABC 7.
THE CHICAGO HUDDLE mixes it up with sports talk, humor and music in the high-energy atmosphere of ESPN Zone (43 East Ohio Street, Chicago) where the show is taped on Fridays at 4:00 p.m. beginning September 5. Chiaverini and co-hosts Clark, Ogunleye and McKie will look forward to the team’s upcoming games and the new challenges the Bears face with each opponent as well as offer the latest on what’s happening around the NFL.
Each week on THE CHICAGO HUDDLE: ESPN 1000 Bears reporter, Jeff Dickerson, will offer his analysis on the Bears this season; a “Bear mystery guest” will join Chiaverini and co-hosts to talk shop; and the distinctive sound of Chicago’s “Lee DeWyze Band” will add to the fun.

Today the equity markets gapped lower on news that the Shanghai Composite once again took a nasty beating during their trading session. The US equity markets began bidding hard as the dollar weakened causing commodity prices such as oil to increase, which lead to a rally in oil stocks. Also, fueling the surge in the price of oil was the bullish inventory numbers that came in as inventories declined the most in 15 months. This sent the spot price of oil up to eventually settle for a gain of over $3.00 on the session. The OIH and USO are both consolidating in a triangle formation and will eventually breakout out either to the upside or the downside.

Surprises everywhere; big gap down and then a hard rally, some opportunities were there if traders were nimble.

• The “Trading RM" oscillator is still trying to break the downtrend line. It got above it on the open, then fell back below. A big down move will likely see the oscillator stay above the downtrend line, which is a definite sign the market is loosening and might be time to get more aggressive.

• “Future(s)” gapped down, which was slightly unexpected in last nights post, then the market tried to sell off, but buyers stepped in at 979 again. Tomorrow will likely be mixed action now that it is option expiration week.

• “Range” was above the recent moving average including overnight futures. Market had a slow grind up on decent S&P volume, but very light in other indices. The range oscillator suggests the downside may take a bit to come, possible push to upside again. Regardless, market is loosening a bit.

• “Going Big” was almost 3:1 weighted to the upside percentage when compared to downside. This suggests market is again pushing higher. Possible continuation to the upside, but indecision seems to be the name of the game right now. No real clear direction.

• “Gap DaP” was looking for the flat to slightly up open followed by a sell-off, but market gapped down hard then rallied hard… unexpected given yesterdays oscillations. Market is looking for more of a rally to defy all those thinking a correction is due. History doesn’t repeat, but it can mimic, see the DJIA charts from 1937 bear market for a possible scenario.

Still August trading, which is usually slower, and expiration week, be nimble.

Good luck and Great Trading.

Option expiration week is typically one of the most volatile weeks of the month. At Trading RM LLC we have an approach that attempts to take advantage of these large moves. Please join us today at 3:30 CST for a webinar that will go over some of these strategies. The webinar will last for about 30 minutes. To register for the event please click the link below.

Slow with a few very selective opportunities today.

• The “Trading RM" oscillator is still trying to break the downtrend line. A big move will likely see the oscillator start to spike, which is a definite sign the market is loosening and might be time to get more aggressive.

• “Future(s)” gapped up as expected in last nights post, then the market tried to sell off to yesterdays lows, but buyers stepped in at 979. Today was the first time since November, where after registering yesterday’s oscillator numbers market did not have a sell off the open. The look for the selling to pick up on good volume never came. Tomorrow will likely be mixed action.

• “Range” was around half the recent moving average including overnight futures. Market had a slow grind up on marginal volume. The range oscillator suggests there might be a good amount of downside yet to come.

• “Going Big” was almost 2:1 weighted to the upside percentage when compared to downside. This suggests market is again choppy. Possible continuation in either direction… no real clear direction as for now. Market may look for a hard move like Monday’s, but be prepared for more slowness.

• “Gap DaP” was looking for the flat to slightly up open, but market did not fill the gap completely to yesterday’s lows. Futures are again likely to be flat to slightly up tomorrow morning, but morning news could dramatically affect the days direction.

Still August trading, which is usually slower, be nimble.

Good luck and Great Trading.

Option expiration week is typically one of the most volatile weeks of the month. At Trading RM LLC we have an approach that attempts to take advantage of these large moves. Please join us tomorrow at 3:30 CST for a webinar that will go over some of these strategies. The webinar will last for about 30 minutes. To register for the event please click the link below.

Today equity markets around the world experienced a sharp sell off with Asian markets leading the way down. Gold prices also retreated nearly 1.5% during today's session, which put even further pressure on miners. One miner I would like to highlight is Newmont Mining Corp (NEM). Currently, NEM is sitting on some significant support and if the equity markets as well as the precious metals such as gold make another leg down it may be lead to some trouble for NEM. Below is NEM both on the daily and weekly.

Good trading on the open, then slow with a few very selective opportunities the rest of the day.

• The “Trading RM" oscillator is really trying to break the downtrend line. A big move tomorrow will likely see the oscillator start to spike, which is a definite sign the market is loosening and might be time to get more aggressive.

• “Future(s)” gapped down hard and had the continuation down. Depending on the morning economic news, futures are likely to be flat or gap up slightly to 984. After which, the first move will likely be downward to test today’s lows.

• “Range” was almost double recent moving average with about 28 handles including overnight futures. Market had a slow grind down on good volume. Overall, the market made a defining move lower through the recent range, which suggests there might be a good amount of downside yet to come.

• “Going Big” was almost 2:1 weighted to the downside percentage when compared to upside. This suggests market has more continuation to the downside possible off the open… possibly a hard definitive move again, but more likely to be slow and grinding. Be prepared for the morning news to throw a plot twist in the storyline.

• “Gap DaP” acted how it has of recent when gapping down more than 10 ES handles. If futures traders look to have a flat to slightly up open, market will likely fill the gap completely to today’s lows.

Still August trading, which is usually slower, be nimble.

Good luck and Great Trading.

COF (Capital ONE) looks to be at a critical level. It has rallied to break above $35 for the last 3 consecutive days. The last two days are definitely NOT what you want if you are long COF. It has closed exactly where it has opened. This is showing clear indecision and COF seems to be running out of steam to the upside. These pattern has come after an extended run higher. (highest price in stock for 2009) Furthermore, the volume today picked up. Today's volume of 14.63 million is the higest daily reading for COF in August. I will be looking for continuation to the downside in COF.

Investors seem to have gotten a sweet tooth for sugar as prices have hit a 28 year high due to worldwide supply shortages. Sugar prices have nearly doubled this year alone and may continue to go up as there is strong demand from emerging markets such as India. Adding to the sweetness of this rally is speculation that there will be adverse weather, which could cut output.

Often times on our desk we discuss trading "appropriately" to the current market conditions. Given that it is mid August, Friday, and that volatility and market activity has been weak at best, it is important to truly consider what "appropriate" means.

These numbers in and of themselves do not have any real significance. The key is to compare them to periods of 5 star volatile trading. If you make 5 decisions during slow trading, you better be able to make 15+ during "crazy" trading. Then your numbers are put in perspective and your trading equation works. If you can not do this, then perhaps 5 decisions on a slow summer Friday is too many. Each trader has his/her own make up and must adjust accordingly.

During these slower periods, I am not only reacting to my trading in the moment, but thinking two and three steps ahead for the next opportunities the market presents.

Slow trading this morning despite the market moving a fair amount.

• The “Trading RM" oscillator is still on the downtrend line, but was popping a bit today and testing the line. Unless something dramatic happens tomorrow, looking for the more of the same. Trading RM believes being patient is appropriate.

• “Future(s)” were moving, gapped up like the Oscillator indicated would happen today, then the market sold off, only to rally even harder. Depending on the morning economic news, futures are likely to test the highs seen August 7^th, we’ll see how market reacts.

• “Range” intra-day was the recent moving average with about 14 handles today and including overnight futures it was a little more. Market couldn’t make new highs today, but did close up despite the selling all morning. Until the market breaks the present trading range, 990 to 1012/1016 (which might happen soon) stay nimble.

• “Going Big” was almost 2:1 weighted with upside percentage when compared to downside which Trading RM did expect in last nights post. This suggests market more continuation to the upside is possible… Market may look hard for a breakout, but be prepared for the morning news to throw a plot twist in the storyline.

• “Gap DaP” acted exactly how Trading RM posted last night. The gap up, sell-off couldn’t touch lows, so rallied to the high 1012… Futures traders will be setting up for the morning news, this could set the market up for a big day in either direction

Summer Fridays, be nimble.

Good luck and Great Trading.

Slow trading today… market ran really hard off the open, but then almost stagnant. Some good trading opportunities, but must be nimble.

• The “Trading RM" oscillator is still on the downtrend line, fell off a little yesterday, continued off today. Unless something dramatic happens tomorrow, looking for the more of the same. Trading RM believes being patient is appropriate.

• “Future(s)” flat like Trading RM expected last night, however, the up move was market showing it’s domination and control of where the trading happens. Market popped hard immediately, but met resistance. Futures traders again maybe getting tired of trying to suggest a down move, overnight and pre-market traders could get with market going up.

• “Range” was intra-day was more than the recent moving average with about 20 handles today and including overnight futures it was a little more. Market couldn’t make new highs today, but did close up despite the selling in the last 20 minutes. Until the market breaks the present trading range, 990 to 1012/1016, looking for more chop.

• “Going Big” was almost 2:1 weighted with upside percentage when compared to downside which Trading RM did not expect given recent history. This suggests market more continuation to the upside is possible.

• “Gap DaP” went straight up, which Trading RM hasn’t seen for awhile. While there were a couple downside plays, most of the action was upside in the AM. Recent history shows a gap up is likely, followed by a test of key levels.

Today had selective trading opportunities; money is there for the taking, be ready for the aggressive days, they will come.

Good luck and Great Trading.

Slow trading today… not too many opportunities.

• The “Trading RM" oscillator is still on the downtrend line, fell off a little today b/c the trading was so slow. Unless something dramatic happens tomorrow, looking for the more of the same. Trading RM believes being patient is appropriate.

• “Future(s)” gapped down a little and had a little continuation. Market tried to pop, but met resistance. Not too much action in either direction. Looking for futures to test the downside more. 3 of the last 5 times we have seen this kind of action in the futures, the next day started to the downside.

• “Range” was intra-day was less than the recent moving average around 10, including overnight futures, range was double. Market couldn’t close at higher again, thus expecting the range to increase with another test of lows, any push higher could be more range bound.

• “Going Big” was almost 2:1 weighted with downside percentage when compared to upside like Trading RM expected last night. Recent history shows us more downside divergence is likely.

• “Gap DaP” was very slow today, straight move down after a small gap, but nothing registering any momentum. Recent history shows us a flat open with some downside pressure is likely.

Today had very selective trading opportunities; money is there for the taking, be ready for the aggressive days, they will come.

Good luck and Great Trading.

(click on picture for a video introduction to Trading RM)



Trading RM, LLC is a proprietary trading and teaching firm which prides itself on its unique approach towards expressing market opinions. The firm specializes in trading options, futures and equities, and is committed to providing the tools and training needed to trade profitably in today‘s markets. Our unique approach to trading allows us to maximize profits while minimizing risk. Trading RM, LLC’s mission is to educate and attract motivated, disciplined, team orientated traders and in turn provide a unique environment to accelerate each trader’s learning curve to become a successful trader.

Traders at Trading RM are taught to utilize an approach which teaches traders how to express their trading views in the best possible way. At Trading RM, members strive to execute a solid game plan comprised of consistent decision making. They know this is the key to the success of the trader.

Focusing on the Trading RM Five Principals of Trading - selection, timing, capital allocation, controls and disciplines, and continual learning - The members of Trading RM LLC are confident in their ability to teach trading success. At Trading RM LLC they look forward to the opportunity to help you become the best trader you can be.

Contact Information:

Trading RM LLC
Chicago, IL
http://www.tradingrm.com/
info@tradingrm.com

The European Central Banks have agreed to extend a cap on gold (GLD above) sales for 5 years. Under the new agreement, the ECB reduced the maximum total gold that could be sold from 500 tonnes to 400 tonnes.

The US Dollar Index (UUP above) has gained strength the last few days, which has sent commodity prices including gold lower. Recently, Bob Prechter of Elliot Wave International announced that he believes the Dollar has bottomed.

Slow trading today… very light volume. But some decent opportunities in select names

• The “Trading RM" oscillator is still on the downtrend line, started testing it hard today, but then the afternoon pop took it back to flatline, Trading RM believes being patient is appropriate.

• “Future(s)” were flatish, then gapped down a little, market tried to pop, met resistance, then sold off, then rallied late, but again couldn’t get this market positive. Decent two-way action. Market is relatively quiet and trying to decide direction. 3 of the last 5 times we have had this type of action, the next day finished lower, the other two were flat.

• “Range” was intra-day was less than the recent moving average around 9. Market couldn’t close at highs... might be another warning that things are getting long in the tooth. Be nimble a big move may be in the works.

• “Going Big” was exactly 1:1 with mixed action all day. 2 of the last three times this has happened following some upside weighted days the next day is substantially weighted to the downside.

• “Gap DaP” was very slow today, small fill off the opening move down, but nothing registering any momentum

Today had selective trading opportunities, money is there for the taking.

Good luck and Great Trading.

Slow trading today… market pushed lower until the afternoon bump which again couldn’t bring it positive, might be a sign.

• The “Trading RM" oscillator is still on the downtrend line, started testing it hard today, but until it pops, Trading RM believes being patient is appropriate.

• “Future(s)” were mixed but pretty much one-sided by days end. Market is relatively quiet and trying to decide direction.

• “Range” was intra-day was a bit more than the recent moving average around 16. When including overnight futures it was bigger. Market couldn’t close over 1000 level as it has for the last couple days... might be a warning shot As such, market seems like it is losing some steam. Be nimble a big move may be in the works.

• “Going Big” was greater percentage to the downside when compared to percentage to the upside all day, a little over 2:1. Futures have been behind the game, or way ahead, but might have incentive tomorrow to push down. Trading RM is definitely looking for more downside divergence tomorrow, today was expected.

• “Gap DaP” has been spot on recently. Today’s up a small amount and then market lower was not a surprise, which followed the gap theory well. If futures try to push down more than 10 handles pre-market, look for continuation to the downside as recent history shows. Either a definite lay it all out there is coming or market will show traders who is boss.

Today had selective trading opportunities, tomorrow could be more of the same or very broad based.

Good luck and Great Trading.