09.30.13 Govt Shutdown = Market Gap Down

As third quarter comes to an end the prospects for Federal Gov’t shutdown is likely. Markets for the most part have taken the political bantering in stride, but clearly any extended shutdown could have rippling effects and the Markets do not like uncertainty, hence a gap down for Monday.

Price has “Jumped the Creek” which means a gap in Globex beyond closing weekly prices. The violation of Prior Weekly Low (PWL) at 1680 targets 1670 – 73 zone which price is currently trading at 8 am ET. Continuation of current weakness suggests price could fall further to 1662 – 65 zone which is a multi-time frame extreme.

Penetration of Globex High 1676.25 targets 1680 then back to 1685. Traders must respect the current break as valid as we’ve been opining this past week that BIG $ has been in “sell-mode” on any bounces. Also, keep in mind the “news algos” will be turned on, so if there is any “blabber-mouthing” from politicians the algos will respond to “key-words” mumbled.

Remain disciplined and flexible.

Good Trading…David

Habitude Seven
I take the long term view. I am willing to lose in the short term. I understand that losses are a necessary cost of doing business, like inventory to a merchant. Drawdowns are viewed as temporary. I realize that my wins and winning periods are part of the broad process. Each trade is but one in a string of trades. What is happening now is one piece of a much larger puzzle. Because of this I do not get overly euphoric or despondent.


09.27.13 Black Eyed and Brusied

Bulls and Bears have been slugging it out this week like Rock’em Sock’em Robots with both sides having black-eyes and bruised.

Bulls repelled another selling onslaught yesterday defending 1685 – 88 zone forcing a late bounce into closing bell. In overnight action sellers again are on the attack at the 1685 – 88 zone and having some success at forcing prices a bit lower.

Successful violation of 1685.75 targets 1680, then 1675 – 80 zone. Bulls would need to mount a strong rally that penetrates 1694 – 97 zone to get prices back to 1698 – 1700 zone where there is ample supply waiting to be sold by the Big Institutions, as they are currently in “sell-mode” on any rallies.

Good Trading…David

Habitude Six
I am at peace with uncertainty. I know there is no such thing as a sure thing. I have no particular need to be right. I understand that being perfect has no place in trading. I am flexible. I am willing to change my mind. I am alert to scenario changes. I accept the information that tells me I am on the right track or on the wrong track.

09.26.13 Weakness Continues

Bears keep attacking the Bulls stronghold at the key 1688 level….Unless the Bulls can continue to defend their ground and push price back above 1695 – 1700 zone the next wave of selling has high odds of violation current lows at 1684.50.

Today’s odds suggest if additional “material selling” does occur then decline greater than 10 handles come in at 72% with an average range of 18.75 handles. Of course these odds are not certainties so trade setups accordingly as anything can happen.

Violation of PDL (1684.50) targets 1681.50, 1677.50  down to X-Zone extreme 1672 – 1675. IF a rally does develop and 1695 is penetrated, THEN upside targets 1698, then, 1700 – 1705 X-Zone.

Remain nimble and disciplined.

Good Trading…David

Habitude Five
I think in terms of probabilities. I do not know, all I have are probabilities. Probabilities are at the core of my decisions. Through consistent application of the probabilities, I will win.

09.25.13 Battle for Control

The “lines in the sand” have now been clearly drawn by opposing forces (bulls/bears) and each side is defending respective lines vehemently. Those lines are 1688.00 Bulls and 1700.00 Bears.

Penetration of upper 1700 line calls for a move to 1706 -10 zone, whereas, a Violation of 1688.00 targets 1675 – 80 zone.

Today is Day 3 of Cycle which historically has high odds (83%) of range greater than 10 handles with an average range of 17.75.

Trade strategy is to continue to buy dips as long as 1688 holds and sell rallies until 1700 is penetrated. Currently the range is wide enough to play both sides…so remain disciplined to valid setups and control risk.

Good Trading…David

Habitude Four
I am at ease with controlled risk. I will risk and I will win. I am courageous. I will take a chance. I manage risk to my comfort level. Risk keeps me on my toes, keeps me alert and at the top of my game.

09.24.13 Trade Strategy

Initial Support Zone: 1688 – 1690

Initial Resistance: 1698 – 1700

Penetration of Prior Day High (PDH) targets 1703.50…1707.50…1709 – 1712 zone

Violation pf Prior Day Low (PDL) targets 1684 – 86 zone, then 1678 – 82 zone

Average Range for Cycle Day 2: 14.50

Odds of Rally > 10  85%…>20  45%

Good Trading…David

Habitude Three
I am willing to accept loss. Losing is an integral part of the process. I know and accept that individual losses and losing periods will happen. They are endemic to trading. I do not like loss. I do not expect loss. I simply accept loss as a cost of doing business.

09.23.13 Fed’s QE Gap Closed

The Fed’s QE Gap is now closed and it’s back to normal trading business. The Govt Debt Ceiling Debate Saga will now be the focus on traders/investors minds. We’ve seen this movie before and the characters are the same…Congress will NOT receive an Emmy Award for their performance.

Friday’s Blog post had members trading from the short-side early and throughout the session till settlement. It’s important to get positioned early to be able to ride the “Slope-of-Hope” momentum train.

Typically following trend-day is more of a range-bound type consolidation, so with residual selling momentum a break below Prior Day Low (PDL) could continue to push price down to 1695 – 97 zone. Violation of the 9/18 pivot low suggests deeper move which could carry down to 1688 – 90 zone.

Initial resistance resides 1708 – 10 zone on any bounce…If the market can stabilize and stage a solid rally attempt, price could carry back up to 3-Day CPZ 1713.00, but odds are relatively low at this point.

Good Trading…David

Habitude Two
I am detached from the results. I think in terms of the process and the validity of the process. I understand that I am more than the trading. I do not tie a fragile ego to any day’s trading results. I have faith that over time I will make money. The results of any one trade are statistically unimportant. I think in term of probability. A single trade says nothing about me as a person.

09.20.13 Trade Strategy

Today’s Trade Strategy will be short…Market’s are consolidating recent surprise Fed move to hold QE purchases steady at $85B per month.

Current support is prior day low and globex low at 1713.25…Violation of this level calls for lower levels to be tested…1710 – 1712 zone which was highlighted in yesterday’s session. Any further selling beyond this zone could push price down to 1707 – 09 which is 3D CPZ.

Initial resistance resides between 1718 – 20 zone…Penetration of this zone suggests 1721.50 – 24 zone to be re-tested.

Good Trading…David

Habitude One
I am ready to trade. My patterns are verified. My homework is complete. My mind is clear. I have rehearsed everything. I am prepared strategically, emotionally, and financially each and every day

09.19.13 Fed’s QE Surprise No Taper

The Fed surprised the market’s with announcement of “no taper”, leaving bond buying steady at $85B per month. Markets reacted positively as Major Indexes broke out to new highs. So for now, the “crack-pipe” has been re-lit and everyone can take a deep “toke” to make them feel good again. The reality is that the Fed does not view the recovery as robust as they had anticipated…Perhaps the Fed should interview main street Americans rather than consult elite corporate executives…But that’s another story…For now “let the good times roll” on Wall Street.

Having broke out to new highs there is no real reference level above current price, so higher targets are “estimates only” based upon historical ranges.

Prior Day High (PDH) 1723.25 is initial marker…Penetration and Hold this level suggests further upside 1728 – 1732 zone. Initial support comes in 1716 – 18 zone…Violation of this zone suggests corrective price action targeting 1708 – 16 zone (wide zone).

Remember: “Price Validates Levels”…”Levels DO NOT Validate Price”

Stay disciplined my friends!

Good Trading…David

Habitude Twelve
I am disciplined. I behave in a way to reach my goals. I do what I intend to do. I have the intent to win through right actions. I will be patient for patterns to emerge and mature. I am decisive. I decide easily and act promptly. I act in the right way and right on time. When there is nothing to be done, I will wait.

09.18.13 Fed Day

The FOMC announcement at 2:00 p.m. ET for the September 17-18 FOMC policy meeting is expected to leave policy rates unchanged but focus on whether bond purchases will be cut back sooner or later and how fast. Also, the Fed will release its quarterly forecasts before the chairman’s press conference, generally about 2:00 p.m. ET with the statement.

FOMC Consensus Forecast for 9/18/13 policy vote on fed funds target range: unchanged at a range of zero to 0.25 percent

For expectations of Fed taper, the Econoday survey panel has a median forecast for a $10 billion reduction to $75 billion from the current level of QE purchases of $85 billion monthly. The low forecast for QE purchases is $70 billion ($15 billion reduction) and the high is $85 billion (no taper at the September meeting).

Prices held our anticipated 1688 support level and as expected the bulls did indeed get emboldened as prices rose with solid underlying bid, settling ES mini’s at highs of session.

Today is Fed Day, so expectations are high that QE “taper” will have minimal impact on financial markets, hence the bullish sentiment.

IF price action can hold above PDH 1699.25, THEN upside surge could carry 1705 – 08 zone. Failure to sustain trade above this level calls for pullback 1693.75 – 95.50 zone with further downside targeting 1688 – 90 if supports are violated. Trade below PDL calls for 1681 – 85 zone to be tested.

There is a wide array of price levels and range today, but since it’s Fed Day, potential always remains for having wide price swings depending on markets reception of Fed’s decision.

Stay focused and disciplined.

Good Trading…David

Habitude Eleven
I am courageous and I always act, even in the face of uncertainty and possible loss. Do not say, no fear. Feel the fear and act anyway. I may be frightened, but I still saddle up. I am not reckless. I act promptly in accordance with my methodology. I respect my calculations. I have a healthy respect and I balance that respect with my courage. I am an explorer. I am on a hero’s journey.


09.17.13 Trade Strategy Pre-Fed

Yesterday’s “jumping the creek” price action tested highs at 1703 only to be rejected as price retraced back to 1688 handle which we highlighted live in Trading Room as potential dynamic support.

Overnight trade continues to hold the 1688 handle support as trade quieted down and has settled into a narrow range as of this writing (8:00am). With the FED beginning its two-day meeting today with subsequent announcement and press conference, traders and investors are expected to tread (trade) lightly ahead of tomorrows decision.

Gap support at 1688 continues to be “key marker” for bulls…IF this level is violated, THEN deeper retracement would bring price back down to fill-the-gap within key zone 1677 – 81.

Successful hold of 1688 would embolden the bulls…and setup a potential move back up to challenge prior highs. Today’s CPZ 1693.75 is initial hurdle followed by 1696 and 1699 respectively.The 3-Day Bullish Cycle price targets have already been achieved and exceeded, so any further strength is gravy for the bulls.

Remain alert and focused on valid trade opportunities.

Good Trading…David

Habitude Ten
I know anything can happen, and I can handle anything that does happen. I am open minded. My thoughts and perceptions are clear. I know what to look for. I have rehearsed everything. I adapt to change. I will listen to my indicators and the patterns that emerge. I will adjust and not demand that things continue as they first started.