Trade Strategy 07.15.15


Congressional testimony by Federal Reserve Chair Janet Yellen gets underway at 10:00 this morning, with investors closely monitoring the hearing for hints of a U.S. interest rate hike, especially following yesterday’s disappointing U.S. retail sales. The biannual appearances are billed as reports to Congress on monetary policy, but questions tend to range widely. Yellen is also expected to be pressed for details surrounding a 2012 leak of the Fed’s bond-buying plans, now the subject of multiple investigations.


S&P Cash & Futures continued in rally-mode yesterday achieving this Cycle’s Average Target (2103.50) and Penetration Level (2105.50). Continued upside pressure on the shorts along with no negative news flow kept a strong bid throughout the Session. Overnight trade is relatively light again in quiet trade.

Today is Cycle Day 3 (CD3)…Having reached Cycle Targets, residual momentum may take price higher before the next decline begins, though the decline could begin at anytime…This week has Options expiring, which may have a subtle influence on where price settles for the week. The numbers below are rhetorical as the rally and projected targets are already in-place.

Odds of 3D Rally > 10 = 82%; Odds of Rally > 20 = 54%; Average Range = 17.75; Max Average Range = 21,50; Possible HOD = 2113.50 based upon penetration/conversion of CD2 high; Possible LOD = 2084 based upon max average range decline on CD3.

***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 PH (2105.50), THEN there is a 50% chance of extending initially to 2107 – 2108.75 STATX Zone…Continued strength above this zone targets 2113.50 Penetration Level.

Scenario 2: As stated above, cycle targets have been achieved, so the next cycle decline could begin at any time…IF price fails to extend rally and subsequently violates and converts 2098 handle, THEN odds (72%) favor a decline which targets 2092.00 – 2090.25 STATX Zone. Violation of PL (2090.50) targets 2084.00 down to 2081.00 3-Day Central Pivot.

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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