Trade Strategy 06.30.15


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.


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


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