Wheee, that was fun!
For those of you lucky enough to subscribe to yesterday morning's PSW Report we had almost all day to get in at our target entry on Oil Futures (/CL) at $20 per barrell and we got a nice ride to $22.50 this morning – for gains of $2,500 per contract on our two long contracts as Oil blasts 10% higher this morning.
Apparently China is buying up oil to fill up their Strategic Petroleum Reserves while it's so cheap and who could have seen that coming? We could! That's what happens when things get cheap – people buy them! That's kind of the whole point to INVESTING – understanding the true VALUE of things and taking avantage of situations where the PRICE does not match the VALUE. QED!
Still, we don't want to be greedy so we'll set a stop at $22.50 once /CL is over that line and at 0.615 on our Gasoline (/RB) Futures that we picked up as it came back to the 0.55 line into the close – also stupidly cheap and now up close to $3,000 per contract at 0.62.
That was a pick we discussed in our Live Trading Webinar and again in our Live Member Chat Room and playing the Futures is another excellent way you can make quick money to supplement your portfolio during a choppy market.
8:30 Update: 6.65M Unemployment Claims this week! That's about as bad as expected but the market still sold off on the news (which is why we set tight stops on our energy trades) and now we can get back in if we cross over those lines again or perhaps lower). That's double last week's pace and we never like to see accelerating negatives like that.
That should have us re-testing yesterday's lows in the Futures and now I like Nasdaq (/NQ) 7,400 for a long play with very tight stops below. Setting tight stops at a good support like means you limit your losses but not your upside. 2,450 on the S&P (/ES) Futures is already blown but we can jump on those when they cross back over (it's better to play with the momentum anyway) and place VERY TIGHT STOPS below that line but /ES was at 2,500 this morning so, if we retake that – the upside potential is $2,500 per contract while stopping out at 2,445 is risking $250. You only have to be right 1 out of 10 times to break even on trades like that!
The market reaction to unemployment doesn't make a lot of sense since we're sending $1,200 to all 160M working Americans AND to 130M non-working Americans BECAUSE we knew there would be a lot of unemployment and that's $360Bn, which is enough money to pay the 10M people who actually lost their jobs on the past two weeks $36,000 each.
So, will there be more money or less money in consumers' hands next month when the checks come? Yes, there will be 10M less people working (probably 20M by then) and let's say they all made $4,000 per month and it will have been a month with no pay (but they do get unemployment checks – so not NO pay) – that's -$80Bn vs +$360Bn of total cash in the hands of consumers. This is not complicated economics – it's just simple math.
That's why we'll take those Futures longs – most people can't do math!