Trade Strategy 07.23.15


Greek Prime Minister Alexis Tsipras seems to have contained a rebellion in his left-wing Syriza party after winning parliamentary approval for a second package of reforms required to start bailout talks with international creditors. The bill covered rules for dealing with failed banks and speeding up the justice system – two more conditions set by the eurozone and IMF to open negotiations on an €86B rescue loan. Euro +0.7% to $1.10.


Another text book Cycle Day 2 (CD2) unfolded yesterday as price tested and held CD1 low (2102.25) from which to begin current cycle rally. We know based upon historical cycle observations that on CD2 odds (83%) favor 10-handle or greater rally attempt and price did just that from 2102 – 2112 during cash session. In overnight trade price has not made any additional upside progress, so it will be of great importance that bulls are able to clear and convert 2113 – 2115 Three Day Central Pivot Zone in order to expand the rally. Failure to do so increases odds (67%) of a retest of 2102 handle.

Today is Cycle Day 3 (CD3) Odds of 3D Rally > 10 = 82%; Odds of 3D Rally > 20 = 54%: Average Range = 17.75; Max Average Range = 21.50; Possible HOD = 2122.50; Possible LOD = 2090.50

***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: Having rallied off CD1 low in prior session, price will need to hold 2108 SPOT and CONVERT 2112 SPOT for bulls to hold control. IF 2113 – 2115 3D CPZ is converted , THEN odds (82%) favor continued move higher targeting 2118 SPOT then 2122.

Scenario 2: Failure to convert 2112 SPOT and subsequent violation of 2108 opens door for retest of CD1 Low (2102.25). Violation of the level expands downside targets 2095.50 – 2092.25 STATX Zone with CD3 Violation Target 2090 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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