My bedtime routine is simple.
After enjoying the evening teaching youth group, watching a show or two with my lovely and talented wife, or catching up on some reading, it's time to hit the hay.
But, remember, I love to trade, so no evening is complete without a last look at the trading. Right before I run upstairs and tuck in for the night, I stop by my computer screens and make a quick run-through of the markets.
Nothing too sophisticated.
I check the S&P 500 overnight trading. Then I look at the markets in Japan and China to see what's happening there.
Lastly, I'll run through a few commodities like gold, silver, and oil to see how they're trading in the overnight markets.
But, as it happens, on the night of May 4, at the end of my scans, I saw that something odd and extremely profitable (to the tune of 117% and 132%) had happened.
Something I'm always looking for to make us money.
Now I want to show you what, because it really drives home the tremendous profits possible when you're reading charts and looking for market extremes.
A Lot of Excitement in a Dull Market
In these choppy, "sideways" times, with uncertainty creeping in around the edges, we have to pick and choose trades very carefully.
We have to bear in mind that the broader market has not made any moves greater than 3.4% in more than three months.
But, as you'll see, that doesn't mean there aren't big, extreme moves underway in very specific sectors.
There's always trading happening somewhere on Earth, and oil is one of those commodities that's traded 24 hours a day. So lots of casual observers, presumably asleep, missed what I'd caught.
I'd found crude oil had plummeted – dropped off a cliff, really.
Here's how the chart looked right around midnight…
I was certain there was breaking news of some kind.
Plunges like this usually only happen when there is geopolitical unrest – armed hostilities, terrorist attacks, events of that nature – or if there's big supply news like a natural disaster – a hurricane or earthquake, say, that damages a refinery – that would limit production.
So of course I checked my normal news feeds.
I went to specialty, industry-focused news sites.
I zipped through trade message boards where some knowledgeable people post. I saw lots of activity, but no one had any news.
Essentially, nothing had happened.
Yet, when I looked at a very short time frame, the drop looked even more severe:
About the Author
Nationally recognized technical trader. Background in engineering, system designs, and risk reduction. 26 years in the markets.