Yesterday’s trade was can be characterized are “quiet consolidation”, as price traded within a very narrow range with volumes well below average, forming an “Inside Day”. Overnight trade is also very light with 63K contracts trading as of 7 am ET.
Fedspeak comes alive today with Janet Yellen in Washington. The jobs market and inflation expectations are two of the hot topics. Expectations going into her testimony are for a mid-year rate hike. So it looks as though Mr. Market will be tuned into today’s testimony before making its next move.
Today begins a new Cycle Day 1 (CD1)…Typically we would be expecting some magnitude of decline to probe for a new “secure cycle low”…Given recent broad strength, any decline may be relatively shallow in magnitude. Below are the normalized range values that occur on Cycle Day 1.
Odds of Decline > 10 = 71%; Odds of Decline > 20 = 41%; Average Range = 18.75; Max Average Range =22.00; Possible High = 2117.50 based upon average penetration of CD3 high; Possible Low = 2089.50 based upon average decline on CD1.
***Note: The odds highlighted are NOT predictions or trade recommendations, rather a guide based upon historical observed occurrences.
Scenario 1: IF price can Clear and Convert PDH (2108.75), THEN there is a 45% chance of price extending to 2110.00…Should price continue to have bullish momentum above this level, then expansion to 2113.75 through 2116.75 is targeted. Xtreme upside measures TargetMaster Range Breakout Level 2117.50.
Scenario 2: Yesterday was an Inside Day with low energy…Failure to convert above PDH (2108.75) increases potential for a pullback in price to attract renewed buying, which fits nicely into Cycle Day 1 odds of price decline. Downside levels to be mindful of are 2105.50 – 2104 Central Pivot Zone, followed by 2101.25 – 2097.75 3D CPZ. Below this zone targets TargetMaster Range Breakdown Level 2095.00. Average Range Target measures 2089.25.
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!
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.