Trade Strategy 07.08.15


Earnings season for the second quarter of 2015 unofficially kicks off this afternoon when aluminum giant Alcoa (NYSE:AA) reports results. Investors will be looking for signs of hope to anchor a U.S. stock market that has been tossed around by the crisis in Greece, prospects of an interest rate hike, a stronger dollar, energy prices and the downturn in China. “We’re entering the second quarter much like we entered the first quarter, expecting negative growth on both the top and bottom line,” said Christine Short, SVP at Estimize. The firm is expecting EPS to decrease 3.5% for the quarter, and revenues to decline 2.9%.

Minutes from the Federal Reserve’s June policy-making meeting, once expected to be the moment the Fed began to raise interest rates, will be released today at 2 p.m. ET. The action will follow a renewed call from the IMF for the Fed to hold off on hikes until “clear signs of wage and price inflation.” The declaration puts itself at odds with Fed Chair Janet Yellen who has said “clear signs” are not a prerequisite for higher rates. Yellen is also scheduled to speak about the economy in Cleveland on Friday, granting a chance to see how her thinking has evolved since the June meeting.


Tuesday’s trading session saw price volley back n forth with wide range swings as traders and investors work on balancing out new levels of price value. Successful retest of 7/5 low 2035 handle lead to sharp rally which tested 2075 handle. Price has now established a new trading range marked by those price edges. Expectation will be for continued wider price swings until a new direction is established…Buy Dips and Sell Rips will be tactical trading strategy.

Today is Cycle Day 1 (CD1)…Normal Cycle parameters have been disrupted by geo-political events of Greece, so average price range projections are more likely to be “slice n diced” at both ends of trading spectrum. Remain disciplined in your trading and stayed focused.

Odds of Decline > 10 = 71%; Odds of Decline > 20 = 41%; Average Range = 17.75; Max Average Range = 22.00; Possible LOD = 2042.50; Possible HOD = 2072.50

***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

*****The levels outlined below are more general framework within a larger range…They are to be used are reference prices from which to consider trade opportunities, not hard trade levels.

Scenario 1: IF price clears and converts 2062.50, THEN upside projects 2072.50…Converting PH (2076.25) targets 2085 Average Cycle Rally Target.

Scenario 2: Failure to convert 2062.50 and subsequent violation of 2053 handle opens door for downside test of 2046 “key marker” for buy response.

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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