Trade Strategy 06.30.15

Economy

Greece is just hours away from defaulting on a loan from the IMF, setting the stage for a tense showdown with international creditors ahead of a national referendum that will likely decide its eurozone membership. Reports earlier suggested European Commission President Jean-Claude Juncker made Athens a last minute offer, but Greek Prime Minister Alexis Tsipras doesn’t appear to be picking up the phone. Markets across Asia bounced back today, while European indexes remain mixed. On Monday, about $1.5T was erased from the value of global equities, while the Dow dropped 350 points, to slip below its 200-day MA.

Trading

Gap n Go to the downside with the backdrop of GREK default exacerbated an already weakening condition in the Major Indexes. We have been commenting regularly that Market On Close (MOC) Imbalances have continually been skewed to the Sell-Side…So large institutional investors have been systematically reducing long exposure for several weeks now. To keep things in perspective, Mr. Market has not seen a decent percentage correction for quite some time as “buy the dip” has all but been hard-wired into their investment programming. A good “healthy” correction will act to bring some realities back into the investment thesis and perhaps dispel the view that Mother Goose (Yellen) will forever rescue the Markets.

Today begins new Cycle Day 1 (CD1)…With recent global news flows, disruption in “normal cycle” action may be more pronounced…though we will maintain our trade discipline.

Odds of Decline > 10 = 71%; Odds of Decline > 20 = 41%; Average Range = 18.75; Max Average Range = 22.00; Average Decline = 21.50; Possible HOD = 2092.00 based upon penetration of CD3 high; Possible LOD = 2036.50 based upon violation of CD3 low.

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

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Today’s Hypotheses: July (U) Contract

***The scenario’s outlined below are very loose parameters as the GREK situation is very fluid…Level and tactical trade solutions with be highly in the Trading Room.

Scenario 1: IF price holds above PL (2047.25) THEN odds (55%) favor a bounce with initial target 2065.25…Clear and conversion of this level targets 2079.00 – 2082.50 STATX Zone.

Scenario 2: Violation of PL (2047.25) opens door for further long liquidation (margin selling) targeting 2043.00 – 2038.75 STATX Zone. Below this zone measures CD1 Violation Target 2036.50.

Trade Strategy: Our tactical trade strategy will simply remain unaltered…We’ll be flexible to trade both long and short side from Decision Pivot Levels. Continue to focus on Bull/Bear Stackers and Premium/Discounts. As always, remaining in alignment with dominant intra-day force increases probabilities of producing winning trades.

Stay Focused…Non-Biased…Disciplined  ALWAYS USE STOPS!

Good Trading…David

“Knowing is not enough, We must APPLY. Willing is not enough, We must DO.” –Bruce Lee

 

Trade Strategy 06.29.30

Economy

Stocks are plunging across the globe as Greece looks set to default on tomorrow’s debt repayment and the reality of a Grexit hits the markets. With emergency aid to the country frozen, Athens has imposed capital controls to halt bank runs and confirmed that the country’s banks would remain shut for six working days. ATM withdrawals are being capped at €60/day. Over the weekend, Greek Prime Minister Alexis Tsipras shocked European policy makers by announcing a July 5 referendum on whether to accept the latest offer from Greece’s creditors.

With a default on the horizon, a divergence in the direction of eurozone bond yields is at work today, with money flowing into Germany’s fixed-income market, and out of Spain, Italy, Portugal and Greece. The turbulence is in contrast to last week, when benchmark German bunds fell and Spanish securities advanced amid optimism a deal would be reached. 10-year bond yields: Germany -18 bps to 0.74%; Spain +24 bps to 2.34%; Italy +24 bps to 2.39%; Portugal +30 bps to 2.99%. The yield on Greek 10-year securities jumped the highest since December 2012, shooting up 379 bps to 14.63%.

Trading

No surprise that the S&P emini (ES) is lower in overnight trade with Greece on brink of default. Trade action is expected to be highly volatile as the GREK situation is highly fluid. Most key price parameters have already been exceeded, so it’s best to trade lighter than usual and be extra nimble, if yo are to trade under these conditions.

Today is Cycle Day 3 (CD3)…Odds of 3D rally > 10 = 82%; Odds of 3D Rally > 20 = 53%; Average Range = 17.75; Max Average Range = 21.50; Possible HOD = 2091; Possible LOD = 2070.75

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

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Today’s Hypotheses: July (U) Contract

***The scenario’s outlined below are very loose parameters as the GREK situation is very fluid…Level and tactical trade solutions with be highly in the Trading Room.

Scenario 1: Clear and convert 2075.75 targets 2091.00 (CD1 Low) Above this level measures 2095.00, then 2098.50 – 2101.50 3D CPZ.

Scenario 2: Failure to convert 2075.75 and subsequent violation of 2066.50 targets 2060 handle with deep extreme measuring 2053.75 Dynamic D-Level.

Trade Strategy: Our tactical trade strategy will simply remain unaltered…We’ll be flexible to trade both long and short side from Decision Pivot Levels. Continue to focus on Bull/Bear Stackers and Premium/Discounts. As always, remaining in alignment with dominant intra-day force increases probabilities of producing winning trades.

Stay Focused…Non-Biased…Disciplined  ALWAYS USE STOPS!

Good Trading…David

“Knowing is not enough, We must APPLY. Willing is not enough, We must DO.” –Bruce Lee

 

 

Trade Strategy 06.26.15

Economy

Today’s economic calendar:
10:00 Reuters/UofM Consumer Sentiment

China’s $8.8T stock market has plunged from first to worst on global performance rankings as leveraged speculators unwind their positions and a growing number of analysts warn that valuations have climbed too far. The Shanghai Composite Index tumbled 7.4% today, following a sell-off on Thursday that left Chinese shares down 3.5%. Morgan Stanley has now advised clients to refrain from purchasing mainland shares, saying Shanghai’s June 12 high likely marked the top of the bull market.

Trading

Price failed 2112 resistance and turned lower all day to reach Cycle Day 1 Average Range Projection 2094.00. Prior Daily Trade Strategy 06.25.15 outlined high odds (71%) of a decline greater than 10 handles…so a textbook Cycle Day 1 pattern.

Today is Cycle Day 2 (CD2)…The current low is in place having reached projected range targets…IF this low (2092.00) is a secure low, it should not be violated on any test…We would be anticipating the beginning of this current cycle’s rally with initial target 21099.75 – 2102.50 zone.

Odds of Rally > 10 = 83%; Odds of Rally > 20 = 45%; Average Range = 14.50; max Average Range = 22.50; Possible HOD = 2106.50 based upon average range; Possible LOD = 2080.50 based upon violation of CD1 low.

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

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Today’s Hypotheses: July (U) Contract

Scenario 1: IF price holds above PL (2092), THEN there is a 56% chance of rallying initial to 2099.75…Strength above this level targets 2102.50 – 2104.25, THEN, 2106 – 2109 Three Day Central Pivot Zone.

Scenario 2: Violation and conversion of PL (2092.00) increases odds (68%) of long liquidation initially targeting 2089.50 – 2087.00 STATX Zone. Blelow this zone measures extremes between 2084.25 – 2080.50 TargetMaster Range Breakdown Level.

Trade Strategy: Our tactical trade strategy will simply remain unaltered…We’ll be flexible to trade both long and short side from Decision Pivot Levels. Continue to focus on Bull/Bear Stackers and Premium/Discounts. As always, remaining in alignment with dominant intra-day force increases probabilities of producing winning trades.

Stay Focused…Non-Biased…Disciplined  ALWAYS USE STOPS!

Good Trading…David

“Knowing is not enough, We must APPLY. Willing is not enough, We must DO.” –Bruce Lee

 

Trade Strategy 06.25.15

Economy

Following fruitless all-night talks, Greece and its creditors resumed debt discussions in Brussels this morning, aimed at preventing the country from defaulting on its loans and exiting the eurozone. Reports earlier suggested that Athens had until 5 a.m. ET to come up with a workable economic reform plan or face a “take it or leave it” creditor proposal. Today’s EU summit is seen as the last chance to hammer out a deal before Greece must pay €1.6B to the IMF on Monday.

Trading

Having reached Cycle Target of 2121 and subsequently failing to extend beyond CD2 high, price proceeded to decline through the prior session reaching the Average Cycle Decline and projected Low of Day level 2100.50. Daily Trade Strategy 06.24.15.

Today is Cycle Day 1 (CD1)…Average Cycle Decline is in place, therefore the next rally could begin at any time. Odds of Decline > 10 = 71%; Odds of Decline > 20 = 41%; Average Range = 18.75; Max Average Range = 22; Possible HOD = 2125.50 based upon penetration of CD3 high; Possible LOD = 2099.50 based upon average decline.

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

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Today’s Hypotheses: July (U) Contract

Scenario 1: Having reached the average decline in prior session, the initial target on rally (bounce) is 2111 – 2112.50 3D CPZ. This zone has been a key over/under this week, so the bulls need to capture and convert this zone. Above this zone is 2116 – 2118 STATX Zone…Shorts are anticipated to be “squeezed” above this zone targeting 2125 projected HOD.

Scenario 2: Price has bounce to key 2112 level in overnight trade…Failure to convert this level and subsequent violation of 2106 Central Pivot forces a retest of PL (2099.00). Violation of this level expands downside initially to 2096.50 – 2094.25. Below this level measures 2090.25, then 2087.50 – 2084.50 Range Breakdown Zone.

Trade Strategy: Our tactical trade strategy will simply remain unaltered…We’ll be flexible to trade both long and short side from Decision Pivot Levels. Continue to focus on Bull/Bear Stackers and Premium/Discounts. As always, remaining in alignment with dominant intra-day force increases probabilities of producing winning trades.

Stay Focused…Non-Biased…Disciplined  ALWAYS USE STOPS!

Good Trading…David

“Knowing is not enough, We must APPLY. Willing is not enough, We must DO.” –Bruce Lee

Trade Strategy 06.24.15

Economy

Most analysts agree the U.S. economy is rebounding from a weak first quarter, and today’s final GDP will likely offer more evidence that forecast is turning into reality. First-quarter GDP, reported at 8:30 a.m. ET, is expected to have contracted by 0.2%, an improvement over the previous revision’s contraction of 0.7%. Along with other economic data, the figure will lead directly back to the Federal Reserve, which is mulling the timing of a future interest rate hike

Trading

S&P e-mini (ES) traded in a very narrow range with low volume, as price consolidates within a 10 handle range (2110 – 2120). It seems as though summertime trade is here and as traders we need to adjust our trade outcome expectations…Remain disciplined.

Today is Cycle Day 3 (CD3)…Average Cycle Target (2121.00) has been satisfied, so today is “jump-ball” for direction. Price will need to exceed stated parameters above for next tradable move…Stay Alert!

Odds of 3D Rally > 10 = 82%; Odds of 3D Rally > 20 = 54%; Average Range = 17.75; Max Average Range = 21.50; Possible HOD = 2129 based upon penetration of CD2 high; Possible LOD = 2100.50 based upon violation of CD2 low.

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

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Today’s Hypotheses: July (U) Contract

Scenario 1: Clear and conversion of PH (2120.25) targets 2125.75, followed by 2128.25 – 2131.50 STATX Zone…Range Breakout Target 2134.50.

Scenario 2: Violation and conversion of PL (2111.25) targets 2106 – 2108, followed by 2104.75 – 2100.50 STATX Zone and CD3 Low Violation Target.

Trade Strategy: Our tactical trade strategy will simply remain unaltered…We’ll be flexible to trade both long and short side from Decision Pivot Levels. Continue to focus on Bull/Bear Stackers and Premium/Discounts. As always, remaining in alignment with dominant intra-day force increases probabilities of producing winning trades.

Stay Focused…Non-Biased…Disciplined  ALWAYS USE STOPS!

Good Trading…David

“Knowing is not enough, We must APPLY. Willing is not enough, We must DO.” –Bruce Lee

Trade Strategy 06.23.15

S&P e-mini rallied in Monday’s session reaching measured target of 2121.00 before stalling and consolidating the day’s gains. Market on Close sell imbalance was easily absorbed as shorts were pressed to cover lower sales.

Today is Cycle Day 2 (CD2)…Two-thirds of this cycle rally is in place…Average Cycle Target is 2125.75. IF price clears prior high (2122.00), THEN cycle target should be achievable barring any negative news on the Greek situation.

Odds of Rally > 10 = 83%; Odds of Rally > 20 = 45%; Average Range = 14.50; Max Average Range = 22.50; Possible LOD = 2132.50 based upon penetration of CD1 high; Possible LOD = 2107.50 based upin average decline of 14.50 handles.

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

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Today’s Hypotheses: July (U) Contract

Scenario 1: IF price clears and converts PH (2122.00), THEN there is a 35% chance of reaching 2125.75 (Average Cycle Target)…Above this level measures 2128.00 – 2130.25 zone…TargetMaster Range Breakout Level 2134.50.

Scenario 2: Failure to convert PH (2122.00) keeps price within prior day’s range within initial support 2114.25 – 2112.75 Central Pivot Zone. Violation of this zone opens door for deeper downside targeting 2108.00 – 2106.00 zone. Failure to find responsive buyers deepens the decline to statistical extremes between 2102 – 2100.

Trade Strategy: Our tactical trade strategy will simply remain unaltered…We’ll be flexible to trade both long and short side from Decision Pivot Levels. Continue to focus on Bull/Bear Stackers and Premium/Discounts. As always, remaining in alignment with dominant intra-day force increases probabilities of producing winning trades.

Stay Focused…Non-Biased…Disciplined  ALWAYS USE STOPS!

Good Trading…David

“Knowing is not enough, We must APPLY. Willing is not enough, We must DO.” –Bruce Lee

 

 

Trade Strategy 06.22.15

Economy

There are positive-minded people that say “Hope Springs Eternal”…Others say: “Hope is Not a Strategy”. Regardless of what viewpoint you may closely align to, stocks and bonds surged around the world on news of Greece’s last-ditch package of proposals, giving another boost to global shares after weeks of heavy pressure. European Commission spokesman Martin Selmayr said in a Twitter post that Greece’s new offer “was a good basis for progress.

After failing to agree on a cash-for-reforms deal with Athens last week, eurozone leaders are holding an emergency summit today to “urgently discuss the situation of Greece at the highest political level.” The summit comes just eight days before Athens needs to make a crucial €1.6B payment to the IMF. Over the weekend, Greek PM Alexis Tsipras submitted a new reforms package to foreign creditors, signaling eleventh-hour concessions to avoid a possible default.

Trading

Price tested CD2 high early in last Friday’s session and failed to move above, hence, the anticipated decline begin since prior cycle targets had been achieved and exceeded. Typically when that occurs buy-side energy has been exhausted, so new selling tends to push price lower on CD3 to probe for next cycle’s secure low. Friday’s price decline probed the prior breakout level (2098.00) and end of week settlement.

Overnight trade is higher testing PH (2117.75) on renewed optimism that a deal will be struck in today’s emergency summit meeting. We will mark current range parameters as 2098 – 2118 zone.

Today is Cycle Day 1 (CD1)…Odds of Decline > 10 = 71%; Odds of Decline > 20 = 41%; Average Range = 18.75; Max Average Range = 22.00; Possible HOD = 2126.50 based upon penetration and conversion of PH (2117.75); Possible LOD = 2095.50 based upon Average Decline on CD1

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

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Today’s Hypotheses: July (U) Contract

Scenario 1: IF price clears and converts PH (2117.75), THEN there is a 50% chance of extending to 2125.00 – 2126.50 TargetMaster Breakout Level.

Scenario 2: Failure to convert PH (2117.75) keeps price with prior day’s range, with initial support marked at 2104.00 Central Pivot, with stronger support between 2096.50 – 2099.50 Three Day Central Pivot Zone. Violation of this zone targets 2093.75 – 2091.25 with statistical low extreme zone 2086.75 – 2085.00.

Trade Strategy: Our tactical trade strategy will simply remain unaltered…We’ll be flexible to trade both long and short side from Decision Pivot Levels. Continue to focus on Bull/Bear Stackers and Premium/Discounts. As always, remaining in alignment with dominant intra-day force increases probabilities of producing winning trades.

Stay Focused…Non-Biased…Disciplined  ALWAYS USE STOPS!

Good Trading…David

“Knowing is not enough, We must APPLY. Willing is not enough, We must DO.” –Bruce Lee

 

 

 

 

Trade Strategy 06.19.15

Thursday was textbook Cycle Day 2 as price “back n filled” as expected along with high odds (83%) of rally as laid out in prior Daily Trade Strategy 06.18.15. The rally reached the maximum average penetration level of 2119 as high of day before pulling back slightly for settlement.

In overnight trade price is up marginally but below PH (2119.25). Cycle targets have been satisfied…Residual momentum may take price higher, though we anticipate some choppy trade with slight downside lean into Quad Witch Options Expiration.

Today is Cycle Day 3 (CD3)…As stated above, all cycle targets have been exceeded, so the following numbers are more rhetorical…Refer to scenario’s below for more trade detail.

Odds of 3D Rally > 10 = 82%; Odds of 3D Rally > 20 = 53%; Average Range = 17.75; Max Average Range = 21.50; Possible HOD = 2128 based upon penetration of CD2 high; Possible LOD = 2097.75 based upon max average range on CD3.

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

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Today’s Hypotheses: July (U) Contract

Scenario 1: If price penetrates and converts PH (2119.25), THEN there is a 45% chance of expanding to 2124 – 2128 STATX Zone, followed by 2134 TargetMaster Range Breakout Level.

Scenario 2: Failure to convert PH (2119.25), suggest buyers are satisfied and some “back n fill” action is required to find new buyers. Lower levels to be mindful of on pullback are 2108.75…2105.25 – 2100.75 Central Pivot Zone. Below this zone measure TargetMaster Range Breakdown Level 2095.75.

Dynamic intra-day levels will be updated live in the Trading Room.

Trade Strategy: Our tactical trade strategy will simply remain unaltered…We’ll be flexible to trade both long and short side from Decision Pivot Levels. Continue to focus on Bull/Bear Stackers and Premium/Discounts. As always, remaining in alignment with dominant intra-day force increases probabilities of producing winning trades.

Stay Focused…Non-Biased…Disciplined  ALWAYS USE STOPS!

Good Trading…David

“Knowing is not enough, We must APPLY. Willing is not enough, We must DO.” –Bruce Lee

 

Trade Strategy 06.18.15

ECONOMY

Federal Reserve cut its outlook for interest rates and warned of spillover if Greece talks fail. At yesterday’s meeting, the Fed suggested it might raise rates only once in 2015 by a quarter percentage point, rather than twice as many officials previously anticipated.

Volatile trade throughout Wednesday’s session as FOMC released it’s policy statement and forecast. Price held within extreme price edge parameters between the outlined in yesterday’s Daily Trade Strategy 06.17.15. Both scenario’s played out perfectly.

Today is Cycle Day 2 (CD2)…Expectation is for some “back n fill” price action within prior day’s range, with a slight upwards directional bias.

Odds of Rally > 10 = 83%; Odds of Rally > 20 = 45%; Average Range = 14.50; Max Average Range = 22.50; Possible HOD = 2104.25; Possible LOD = 2073.75.

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

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Today’s Hypotheses: July (U) Contract

Scenario 1: IF Price clears and converts PH (2098.75) THEN upside targets 2101, followed by 2104.25. Above this level measures 2107.50 CD2 High Penetration Level.

Scenario 2: Pullback within prior day’s range is the main expectation to test and confirm lower support levels. Key levels to be mindful of for renewed buy response are 2080 – 2082.50 3D CPZ, followed by 2076.50 – 2073.75 TargetMaster STATX Zone. Downside violation of this zone measures 2068.50 Average Cycle Decline and CD2 Low Violation Level.

Trade Strategy: Our tactical trade strategy will simply remain unaltered…We’ll be flexible to trade both long and short side from Decision Pivot Levels. Continue to focus on Bull/Bear Stackers and Premium/Discounts. As always, remaining in alignment with dominant intra-day force increases probabilities of producing winning trades.

Stay Focused…Non-Biased…Disciplined  ALWAYS USE STOPS!

Good Trading…David

“Knowing is not enough, We must APPLY. Willing is not enough, We must DO.” –Bruce Lee

 

Trade Strategy 06.17.15

Economy
Although the Federal Reserve appears to be getting closer to raising interest rates, it isn’t likely to get there today when officials conclude a two-day policy meeting. Investors will still have plenty to watch, including a policy statement and updated economic projections at 2 p.m. ET, followed by Chairwoman Janet Yellen’s quarterly press conference. “It might end up being a neutral statement, but because people are expecting a dovish Fed, it might come off as hawkish,” said George Goncalves, Nomura rates strategist.

We knew from yesterday’s DTS Report 06.16.15 that odds (82%) were favorable for 3-Day Cycle Rally to 2082 handle with additional upper targets layered between 2084 – 2088, which all were achieved. In overnight trade price has pushed a bit higher to 2095 with residual momentum…Fedspeak today so price action may be a bit muted until the announcement and press conference.

Today is Cycle Day 1 (CD1)…Odds of Decline > 10 = 71%; Odds of Decline > 20 = 41%; Average Range = 18.75; Max Average Range = 22.00; Average Decline = 20.75; Possible HOD = 2098 based upon penetration of CD3 high; Possible LOD = 2068.50 based upon average decline on CD1.

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

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Today’s Hypotheses: July (U) Contract

Scenario 1: IF price clears and converts PH (2089.25), THEN there is a 45% chance of extending to 2095 – 2097.75 STATX Zone. Above this zone measures 2100.75, 2106.00 TargetMaster Range Breakout Level.

Scenario 2: Failure to convert PH (2089.25) increase odds (65%) of decline initially targeting 2085.00 – 2084.25, followed by 2082.00 – 2080 3 Day Central Pivot Zone. Violation of this zone measures 2073.50 TargetMaster Range Breakdown Level. The Average Cycle Decline Target is 2068.50.

Trade Strategy: Our tactical trade strategy will simply remain unaltered…We’ll be flexible to trade both long and short side from Decision Pivot Levels. Continue to focus on Bull/Bear Stackers and Premium/Discounts. As always, remaining in alignment with dominant intra-day force increases probabilities of producing winning trades.

Stay Focused…Non-Biased…Disciplined  ALWAYS USE STOPS!

Good Trading…David

“Knowing is not enough, We must APPLY. Willing is not enough, We must DO.” –Bruce Lee