October 6th, 2016 Watch-list
Evening traders! As we discussed earlier this week, we'll be slowly working back into a normal routine over the next week or so. For the time being we're going to be putting out written watch-list, but that will only be temporary (we will move back to video watch-lists eventually.) So with that said, let's get right to it!
Overall Market Outlook
For the past few weeks we've seen the DJIA unable to really make a solid move one way or the other. A lot of investors and traders are incredibly indecisive at this time due to the indecisiveness of the fed regarding interest rates. This leaves us in a position where we don't really have a clear bias one way or the other, so it's important we be extra picky and only rely on the best chart set-ups while also trying to avoid some plays that are overly connected with the day to day market movements. Below you will find the daily chart for the DJIA with key support and resistance labeled!
New Plays to Consider
With earnings upon us for many companies, there aren't many plays i'm too interested in. With that said, we have seen oil make a massive move lately and USO is sitting right up near some key resistance levels. Though many big time investors feel oil could run higher, it looks like it may see a pullback shorter term. Anytime we see USO topped out and appearing ready to reverse, there are two specific plays I like to look to, DRIP and DWTI. Both of these will move essentially inverse of USO (especially DWTI). So, if USO pulls back, DWTI and DRIP will run higher. As usual, it would not be wise to enter both of these trades at the same time as they will do the same thing. Also, keep in mind that both of these are on the higher risk side of the trading scale. Look to enter with reduced capital and understand that they can run quickly, up or down.
Strategy: The first thing we want to see is a 3/4 sell signal in USO. That will signal to us that Oil appears ready to reverse. After that, we want to either target DWTI, or DRIP (not both). Look for the specific play you are targeting to form a high low on the 15 minute chart (with the USO 3/4 sell still intact) before taking an entry (utilize the 15 minute technique.)