Trade Strategy 07.01.15


As market participants get ready to start the third quarter, analysts, investors and economists are all pondering the same question – where will stocks go from here? The S&P 500 finished Q2 with a decline of 0.2%, its worst showing since 2010, while the Dow ended the quarter down 0.9%. The Nasdaq Composite finished the period in the green, but not by much – up 1.7%. Will turmoil in global markets and a Fed rate hike put pressure on stocks in Q3, or will investors be focused on U.S. economic growth and corporate profits?


Following an early retracement bounce, S&P e-mini (ES) sold off to test the Cycle Day 3 (CD3) Low successfully. Price are now contained within two-day range between 2080 – 2046. Volatility Index VIX has risen to 18.50 which provides day traders greater intra-day price movement, so embrace the volatility. Expectation is for price to remain within current trading range, so buy dips and sell rips from key levels is basic trade strategy.

Today is Cycle Day 2 (CD2)…Increased volatility allows price to reach and exceed cycle target levels now in short order…Max Range Levels outlined are getting achieved many times within the day session.

Odds of Rally > 10 = 83%; Odds of Rally > 20 = 45%; Average Rally = 23.50 handles; Average Range = 14.50; Max Average Range = 22.50; Possible HOD = 2077.25 based upon penetration of CD1 high; Possible LOD = 2035.50 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: September (U) Contract

Scenario 1: IF price holds above PL (2046.75), THEN there is a 76% chance of Rally targeting 2068.75 (Avg Cycle Target)…Beyond this level measures 2079.50 (Cycle Penetration Level)

Scenario 2: Price has rallied higher in overnight trade…Resistance is located with 3D CPZ 2069.25 – 2072.25…IF price is rejected from this zone, THEN expectation is for price to trade lower to 2058.00 – 2056.00 zone, for a buy response…Should this zone be violated, lower targets 2046 handle.

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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