Trade Strategy 07.22.15


Disappointment over U.S. corporate earnings pushed stocks lower on Wednesday, after a whole host of companies’ results fell short of Wall Street’s expectations. Dim outlooks and guidance were seen at Apple (NASDAQ:AAPL), IBM (NYSE:IBM), Microsoft (NASDAQ:MSFT), Yahoo (NASDAQ:YHOO) and United Technologies (NYSE:UTX), while commodity producers deepened declines. U.S. shares closed Tuesday’s session in the red, as the Dow fell 181 points, and the stock market recorded its first broad decline in four days. Futures: Dow -0.4%. S&P -0.4%. Nasdaq -1.1%.

Meanwhile, commodities are taking another beating, as anticipation of a Fed rate hike and the dollar’s strength, as well as soft global growth and a supply glut, weigh on demand for raw materials. Gold fell on Wednesday for a seventh session in eight, reflecting sustained downward pressure on the metal days after its steepest drop in almost two years. Crude futures are also heading south, amid speculation weekly supply data due later in the session will show U.S. inventories rose unexpectedly last week. Gold -0.9% to $1093.70 an ounce; Crude -1.1% to $50.29/bbl.


Tuesday’s trading session was an absolutely text book Cycle Day 1 (CD1) as price declined to reach Violation Target outlined in prior DTS Report 07.21.15. Projected HOD was 2126.00…actual was 2125.00…Projected LOD was 2106.75…actual was 2108…Both within the margin of error (MOE).

Today is Cycle Day 2 (CD2)…Most of the expected decline is currently in place, though residual momentum may take price lower before the next rally begins…Average Cycle Decline Target measures 2103.75.

Odds of Rally > 10 = 83%; Odds of Rally > 20 = 45%;, Average Range = 14.50, Max Average Range = 22.50; Possible HOD = 2118.00; Possible LOD = 2097.00.

***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 PL (2108.00), THEN initial upside projects 2113.00 Central Pivot…Above this level targets 2116.00 – 2118 3D CPZ. Average Range Projects 2122.50 for upper target.

Scenario 2: Price closed weak within prior days range, so residual momentum may take price lower to probe for a “secure low” from which to stage next cycle rally. Average Cycle Range Decline Target is 2103.75…Failure of buy response in sufficient size to absorb selling may push price lower to 2097.00 CD2 Violation Target.

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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