Trade Strategy 09.30.14

Early test of Cycle Day 1 (CD1) Low during Open Range held firm allowing price to rally reaching average range +14.50 handles. Continued strength in overnight has price up an additional +8 handles as of 8 am ET, securing another Positive 3-Day Bullish Cycle. End-of-Month window dressing may keep a firm bid underneath price throughout the session, but as we know, anything can and does happen, so remain alert today.

Today is Cycle Day 3 (CD3): Odds of 3D Rally . 10 = 82%; Odds of 3D Rally > 20 = 53%; Average Range on CD3 = 17.75; Max Range = 21.25; Possible High Range on CD3 = 1976 – 1984 based upon 3-Day Bullish Cycle.

***Note: The odds highlighted are NOT predictions, rather a guide based upon historical observed occurrences.

Today’s Hypotheses:

Scenario 1: IF prior day high (1974.00) is penetrated and converted, THEN there is a 35% chance of reaching initial Cycle Target of 1976.25, followed by expanded cycle targets between 1980.25 – 1984.00.

Scenario 2: Failure to convert prior day high (1974.00) suggests buying energy has run its course…Any pullback would target prior accepted zones for renewed buy response. Levels to be mindful of on any pullback are: PDVTMP 1964 – 66 zone; 1959.50 – 61.50 zone which represents CD1 low and prior day Initial Balance midpoint.

Trade Strategy: We will remain focused on trading the long side on pullbacks to key Decision Point Pivots (DPP’s). Overhead resistance zones such as 3D CPZ may offer short-side trade if there is a failed auction…So we are open-minded to trade in either direction. Focusing on what has been working…Bull/Bear Stacker and Premium & Discount Trade Setups.

Focus on Trading Process…Not Outcome…ALWAYS USE STOPS!

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.

PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS

 

Trade Strategy 09.29.14

Last week’s trade saw increased volatility with the Algorithm’s whipping around price in each direction causing increased “trader anxiety”. Though the bigger picture remains bullish, there definitely seems to be a Change of Character (COC) to a more “risk-off” posture. Hedge Funds gave been underperforming the broader market this year, so perhaps a bit of “come from behind” trade is taking place, which has increased the daily price swings…We know one thing for sure…volatility is now on the rise. As traders, we need to have greater focus on our trading discipline, attentiveness and focus on the very best trade opportunities with highest probabilities.

Today is Cycle Day 2 (CD2): Odds of Rally > 10 = 83%; Odds of Rally > 20 = 45%; Average Range on CD2 = 14.50; Max Range = 22.25

***Note: The odds highlighted are NOT predictions, rather a guide based upon historical observed occurrences.

Today’s Hypotheses:

Scenario 1: Price settled in the upper quartile of days range with Prior Day High (1979.25). IF price can penetrate and convert this level, THEN there is a 65% chance of reaching 1981.50 – 1984 STATX Zone, followed by 1985 – 1988.25 Zone, based upon conversion of PDH.

Scenario 2: Failure to convert PDH (1979.25) suggests some back n fill price action to absorb Friday’s late day short cover rally to find “real buy response”. Levels of interest on pullback are: 1956.50 – 1958.75 STATX Zone and TargetMaster Breakdown Level. IF this zone is violated and converted, THEN further liquidation may unfold which targets 1947 – 1945 zone, followed by deep STATX Zone 1931- 1933.25.

Trade Strategy: With the increased volatility we remain steadfast in following our trade rules for setups. The Bull/Bear Stacker Setups have been working with a higher degree of accuracy, as they are designed to position early in a developing directional move. Remain open and flexible to all trade opportunities. Very Important to “check your biases at the door“…Trade the setups…not opinions.

Focus on the Trade Process…Not the Outcome  ALWAYS USE STOPS!

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.

 

PAST PERFORMANCE IS NOT INDICATIVE OF FUTURES RESULTS

 

Trade Strategy 09.26.14

In Wednesday’s DTS we wrote about violation of FED Day Low qualifying as a “Change of Character” (COC) in market sentiment. Trade Strategy 09.23.24 We followed up by stating: “Any future price rallies may now be met with increased responsive selling pressures as money managers will seek to reduce or hedge Market Risk exposure.”  Trade Strategy 09.24.14

Aggressive selling right from the Opening Range drove prices deep into negative territory yesterday closing in the lower quartile of range and exceeding the average range by nearly two-times. Traders should not have been surprised by the sell-off, since there have been major internal divergences developing for some time. Name of the game now is “Risk-Off”.

Today is Cycle Day 1 (CD1) The Average Decline normally experience on CD1 has been exceeded, so momentum could continue to push price lower to target a possible CD1 Low target of 1946.25 – 1950.50 zone.

Odds of Decline > 10 = 70%; Odds of Decline > 20 = 41%; Average Range on CD1 = 18.75; Max Range = 21.75

***Note: The odds highlighted are NOT predictions, rather a guide based upon historical observed occurrences.

Today’s Hypotheses:

Scenario 1: Price is currently holding above Prior Day Low (1957.75) in early morning trade. IF price can continue to hold above, THEN there is a 45% chance of rally back to 1970.25. Above this level targets 3D CPZ (1974.50 – 1978.00).

Scenario 2: IF price violates PDL (1957.75), THEN downside targets 1950 – 54 STATX Zone, then, 1947.24 – 1944.00 TargetMaster Breakown Level.

Trade Strategy: Very Simple: Remain in alignment with intra-day dominant force by using Bull/Bear Stacker Setups to get on-board directional price shift…Premium and Discounts for continuation of move. Remain open and flexible to all trade opportunities. Very Important to “check your biases at the door“…Trade the setups…not opinions.

Remain Disciplined….ALWAYS USE STOPS!

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.

PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS

 

Trade Strategy 09.25.14

Price held firm above the ONL outlined in prior Strategy Report. This setup an early test of key support during Opening Range…Once price penetrated and converted 1976.25, then the “trading tide” shifted in favor of Bulls. It was game on as price steadily rose 22.25 handles, which is the Max Range on Cycle Day 2 to reach 1990.75, cycle high projected price target.

Today is Cycle Day 3 (CD3)..Projected cycle targets have now been achieved, so any residual momentum could extended beyond current levels before any significant sell response materializes.

Odds of 3D Rally > 10 = 82%; Odds of 3D Rally >20 = 53%; Average Range on CD3 = 17.75; Max Range = 21.25.

***Note: The odds highlighted are NOT predictions, rather a guide based upon historical observed occurrences.

Today’s Hypotheses:

Scenario 1: IF Prior Day High (1992.50) is penetrated and converted, THEN upside targets 1995.50 – 1996.50, followed by 1998.50 – 2000.25 Xtreme Zone.

Scenario 2: Failure to convert Prior Day High (1992.50), THEN expectation would be for pullback in price to find solid support. Levels of interest: 1986 – 88; 1982 – 84 3DCPZ. Any violation of Three-Day Central Pivot zone opens door for deeper pullback which targets 1976.75 TargetMaster Level.

Trade Strategy: We are anticipating relatively quiet trade today with some back n fill price action to balance out the past two trade sessions. Any push to extended cycle target levels would setup a potential reversion short trade…Pullback to key lower levels highlighted above is buy the dip opportunity. As always, follow the trade rules, and remain focused.

Stay Disciplined…Take the Trade…ALWAYS USE STOPS!

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.

PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS

Trade Strategy 09.24.14

***Note: This DTS Briefing Report was composed at 8 pm Tuesday evening for Wednesday trade session.

Cycle Day 1 (CD1) certainly lived up to its reputation of probing for a new secure low…Downward price momentum hit and exceeded Average Range metrics closing on the lows of the session. Price has definitively violated the FED Day Low which constitutes a Change of Character (COC) opined in previous DTS. Any future price rallies may now be met with increased responsive selling pressures as money managers will seek to reduce or hedge Market Risk exposure.

Price has reached a current low of 1969.50 in after-hours trade following Tuesday’s settlement of 1972.50. It appears that price has nearly completed a symmetrical 5-Wave Down Pattern on the 60 minute chart. So it will be interesting to see if stabilization can develop with responsive buyers that view lower prices as good value.

Today is Cycle Day 2 (CD2)…Odds of Rally > 10 = 83%; Odds of Rally > 20 = 44%; Average Range on CD2 = 14.50; Max Range = 22.25

***Note: The odds highlighted are NOT predictions, rather a guide based upon historical observed occurrences.

Today’s Hypotheses:

Scenario 1: IF price can hold firm above Overnight Low, THEN there is a 57% chance price retracement back above settlement (1972.50). IF price can then hold above settlement, odds favor further strength which could push price to 1976 – 78 zone, followed by 1982-1984, up to key Decision Point Pivot (DPP) 1986 – 1988.

Scenario 2: Should price fail to rally and hold below settlement (1972.50), lower levels for critical responsive buying to develop would be 1966 – 1968 zone; 1963 – 65 STATX Zone; and Xtremes measuring 1958.50 – 1960.75.

Trade Strategy: Remaining aligned with the dominant force, which has been the Sellers most recently, has paid nicely with short-side profits. We commented in yesterday report to “not fighting the tape”, and remaining steadfast with our trade methodology…We will continue to do what has been working…Stackers and Premium and Discounts.

Remain Focused…Take the Trade…ALWAYS USE STOPS!

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.

PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS

Trade Strategy 09.23.14

S&P e-mini has now violated the FED Day Low (1983.25) in overnight trade. Should this violation hold during the Pit Session when volume participation is at it’s greatest, this would certainly qualify as a “Change of Character” (COC) in market sentiment. Divergences are already abound across indexes, internals and sectors, so a definitive negative shift in would increase probabilities of lower prices.

Today begins a new cycle which typically is weak on Cycle Day 1 (CD1) to probe for a new “secure low”. The Average Cycle Decline has already been achieved during yesterday’s weak trade session…Further weakness would target cycle expansion zones.

Odds of Decline > 10 = 70%; Odds of Decline > 20 = 40%; Average Range on CD1 = 18.75; Max Range = 21.75 Cycle Target = 1979.75.

***Note: The odds highlighted are NOT predictions, rather a guide based upon historical observed occurrences.

Today’s Hypotheses:

Scenario 1: Price is currently trading below PDL (1982.50)…IF price can secure a firm bid and convert this level, THEN odds favor retracing back to 1992 – 1994 3D CPZ, where there is anticipated to be a sell response. Any price action above this zone, targets will be updated in trading room.

Scenario 2: Should price fail to convert PDL (1982.50), THEN this suggests sellers are dominant force, which may increase likelihood of some long liquidation. Downside levels to be mindful of are: 1979 – 1977 STATX Zone; 1975.50 – 1974.50; 1971.50 – 1969.65 TargetMaster Breakdown Level.

Trade Strategy: We have not given up on the bullish case just yet, as prior pullbacks of recent magnitude have been absorbed and prices have reversed back higher. That said, we now respect the recent strength of the sellers…Remaining flexible to either Long / Short Trade is the hallmark of a disciplined trader…Simply, “not fighting the tape”…We remain steadfast with our trade methodology, focusing on executing Bull/Bear Stacker and Premium and Discount Setups.

Remain Focused…Take the Trade…ALWAYS USE STOPS!

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.

PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS

Trade Strategy 09.22.14

S&P achieved Xtreme Cycle Price Targets (2014.50) early in Friday’s Session …We’ll mark this level as post Fed Day High and Key Decision Point Pivot. Trader’s sold contracts throughout the Pit Session closing price in the lower quartile of daily range. This weakness has continued into Monday’s Globex Session pushing price down to key Fed Day Closing Range near 1993 handle. The Fed Day trading range is an important marker for traders and investors…Any future violation of that day’s range could setup conditions for correction. Market Internals have continued to deteriorate during last week’s run-up, as the NYSE Average Stock, as well as Small and Mid Caps continue to be laggards. One bright spot is Financials (XLF)…With the prospects of rising interest rates, investors are beginning to rotate some money into this group…This phenomena warrants close attention.

Today is Cycle Day 3 (CD3)…Odds of 3D Rally > 10 = 82%; Odds of 3D Rally > 20 = 53%; Average Range = 17.75; Max Range = 21.25

***Note: The odds highlighted are NOT predictions, rather a guide based upon historical observed occurrences.

Today’s Hypotheses:

Scenario 1: Cycle Targets have already been achieved, so profit-taking can begin to occur anytime….Bulls will need to hold Key Decision Point Pivot (DPP) 1993.00 on a closing basis…IF price can hold above this level, THEN there is a 40% chance price converting 1998.00…IF 1998.00 is converted, THEN price targets 2002 – 06 zone.

Scenario 2: Initial resistance is marked at 1998 handle…Failure to convert this level suggests further selling which began in Friday’s session. Minor support is overnight VTMP (1996), Key Support is 1991.75 (ONL)…Any violation and conversion of this level targets 1989.25 – 1987.75 zone.

Trade Strategy: Our tactical trade strategy will remain flexible to two-sided trade action given price is now between key upside and downside markers…We anticipate that buyers and sellers will continue to be responsive at DPP’s highlighted above, so we’ll take our intra-day trade cues from their activity. As always, we maintain our discipline to trade aligned with dominant force and execute our trade setups consistently.

Focus on the Trading Process…Not the Outcome   ALWAYS USE STOPS!

Good Trading…David

Habitude Nine
I will identify my mistakes and learn from them. I am optimistic, realistic and honest. I will not make up stories about the good or bad things that occurred in the past or are happening now. I admit when something is not working. My optimism gives me faith and courage. I will not fall prey to blame and fear.

PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS

 

Trade Strategy 09.19.14

Markets traded in a relatively narrow range yesterday as bullish momentum continued to hold price firm with barely a pullback during the day session. We had stated in prior DTS: “IF current bullish momentum remains strong, any pullback my be relatively shallow.”

The CD1 low (1993.00) came very early in Globex and never pulled back to test…Day Session held Key 1998 level we outlined in Pre-Market Briefing. This new Cycle has legs and could indeed carry price much higher forcing Shorts to cover. Friday is Quad Options Expiration, so plenty of cross-currents may develop throughout the session.

Today is Cycle Day 2 (CD2)…Average Rally = 17.50; Max Rally = 22.25; Odds of Rally > 10 = 83%; Odds of Rally > 20 = 44%; Average Range = 14.50; Max Range = 22.25

***Note: The odds highlighted are NOT predictions, rather a guide based upon historical observed occurrences.

Today’s Hypotheses:

Scenario 1: Prices are in bullish mode…Any pullback we would anticipate responsive buyers to step-in to absorb supply..Key Price Zone to be mindful of is 1998 – 2000 PDVTMP. The initial Cycle Target is 2010.50…Price has almost achieved that objective in overnight trade…Should price continue to exceed this level, upper targets 2013.50 – 2015.50 Cycle Xtremes.

Scenario 2: Initial Cycle Target is 2010.50…Failure to exceed this level suggests buyers have their fill and a pullback to prior support zone (1998 – 2000) for renewed buy response. Any violation of this zone warrants lower probe to 1995 – 1993 STATX Zone.

Trade Strategy: The bullish momentum is clearly the dominant force post FED…We need to respect this regardless of the price level…Buying pullbacks to Key Decision Point Pivots remain the tactical trade. Should there be a reversal in price structure and momentum, only then would we shift to the short-side trade, remaining in alignment with dominant force.

Stay Focused…Take the Trade….ALWAYS USE STOPS!

Good Trading…David

Habitude Eight
I can recover from any setback. I have an attitude of abundance. I affirm abundance in the universe. I know I cannot begin to count the stars. I realize the ocean doesn’t care whether I go to it with a bucket or a teaspoon. I know the market provides a river of opportunities. I invest in my capabilities. I will be happy with my results.

PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS

Trade Strategy 09.18.14

Markets reacted positively to FED Policy Statement yesterday pushing price to to our Cycle Xtreme Target Zone between 2002.25 – 2004.25, as Scenario 1 played out perfectly. Review here: Trade Strategy 09.17.14 

Today begins a new cycle…Normally we’d be anticipating some price weakness to find a new secure low…IF current bullish momentum remains strong, any pullback my be relatively shallow. We anticipate an early test of prior day high before any pullback unfolds.

Today is Cycle Day 1: Average Decline on CD1 = 15.50; Max Decline = 21.25; Odds of Decline > 10 = 70%; Odds of Decline > 20 = 40%; Average Range = 18.75; Max Range = 21.75.

***Note: The odds highlighted are NOT predictions, rather a guide based upon historical observed occurrences.

Today’s Hypotheses:

Scenario 1: Bullish momentum is solidly intact…Key level for price to hold above is 1994 handle…Early anticipation is for price to test PDH (2003.25). Penetration and conversion of this level targets STATX Zone (2004 – 2006.25), followed by 2009.00 TargetMaster Breakout Level, with Range Xtreme measuring 2010.75 – 2012.

Scenario 2: Failure to convert PDH (2003.75) suggests the need to digest gains realized post FED. Initial support will be 1996 – 1998 VTMP Zone…Key Support Marker is 1994 handle. Violation of this level targets 1988 handle followed by 1986.50, then 1984 – 1982 STATX Zone and 3DCPZ confluence zone.

Trade Strategy: Range and volatility have sharply increased providing fast moves in price…We must remain disciplined by staying aligned with dominant force and aggressively take valid Stacker and Premium & Discount Setups. We will actively update Dynamic S&R Zones throughout the trade session.

Stay Focused…Take the Trade…ALWAYS USE STOPS!

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.

PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS

Trade Strategy 09.17.14

Yesterday was Cycle Day 2 (CD2)…Early open gap weakness did not last as price had a strong bid right from the opening print…The key was holding above the Open Range Rotation Midpoint (ORRMP), which triggered our Open Range Strategy Setup. FedSpeak announcement catapulted price to reach Xtreme Cycle Targets highlighted in yesterday’s DTS. You can review here: Trade Strategy 09.16.14.

Today is Fed Day…Policy announcement expected 2:15 ET. Having already reached upper Cycle Targets, residual momentum may take price a bit higher, although some choppy trade may ensue as traders wait for Fed Release.

Today is Cycle Day 3 (CD3)…Cycle Target of 1992.50 – 1993.25 has already been achieved…Odds of 3D Rally > 10 = 82%; Odds of 3D Rally > 20 = 53%; Average Range on CD3 = 17.75; Max Range = 21.25.

***Note: The odds highlighted are NOT predictions, rather a guide based upon historical observed occurrences.

Today’s Hypotheses:

Scenario 1: Having achieved Cycle Targets in prior session, any residual bull momentum will need to penetrate and convert PDH (1994.50). IF this level is converted, THEN there is a 40% chance of reaching 1997.75 – 2000.50, with 2002.25 – 2004.25 TargetMaster Range Breakout Target.

Scenario 2: Failure to further expand the range above PDH (1994.50) suggests some consolidation of yesterday’s gains…Levels to be mindful of on pullback are: 1988.50 – 1985.50 – 1982.50…3DCPZ (1979.00 – 1981.00)…TargetMaster Range Breakdown Target at 1978.75.

Trade Strategy: We are anticipating more of a choppy range type day ahead of Fed Policy Announcement…We will tread lightly on either side of the trade ledger today from Key Decision Point Pivots (DPP’s). We will actively update Dynamic S&R Zones in the Trading Room.

Stay Disciplined…ALWAYS USE STOPS!

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.

PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS