Trade Strategy 06.26.15


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.


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


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