Trade Strategy 02.19.15

Yesterday was a quiet trading session characterized by light relative volume and narrow “inside range day”. This week is options expiration…There is a large Strike Price @ 2100…So trade at or below this strike for remainder of this week would cause all Calls to expire worthless.

Overnight trade traded as high as 2099.50 before backing off, and is currently trading at 3D VTMP 2093.00. Current 10-handle range between 2088.00 – 2098.00 is the playground.

Today is Cycle Day 1 (CD1)…Odds of Decline > 10 = 71%; Odds of Decline > 20 = 41%; Average Range on CD1 = 18.75; Max Average Range = 22.00; Possible High = 2108 based upon average penetration of CD3 high; Possible Low = 2075.75 based upon average violation of CD3 low.

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

Today’s Hypotheses:

Scenario 1: If Price can Clear & Convert PDH (2098.50), THEN there is a 45% chance of extending to 2100.50 followed by 2103.25 with TargetMaster Range Breakout Level @ 2108.

Scenario 2: Failure to convert PDH (2098.50) keeps price within 3-Day Range as expiring options may act to suppress any further upside movement. Initial range support is located at 2088 handle. Violation and conversion of this level targets a move lower to TargetMaster Range Breakdown Level 2082.25. Continued weakness below this level measures 2078 STATX, 2075.75…2073.00.

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

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.

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