Trade Strategy 07.27.15


Chinese stocks fell sharply today, leading the Shanghai Composite to record its largest one-day drop since June 2007, while bringing down European shares and U.S. futures. Weak manufacturing data revealed that profit at the country’s industrial firms dropped 0.3% in June from a year earlier, the National Bureau of Statistics said. Chinese investors seem to have also gotten back on the bear train after classifying the government’s unprecedented intervention as unsustainable. Shanghai -8.5%.


Price decline on Friday exceeded our most pessimistic projection (2081) by at least 12 handles, as Risk Off was market’s intent and there was no hiding. To keep this price action in proper perspective, price remains range bound within larger weekly pattern. Though this current downturn can feel and appear ominous, it’s part of bigger consolidation pattern and normal.

Overnight trade price continues to trade below CD1 Low (2069.75) and is currently within STATX Zone between 2067.25 – 2063.00. CD2 Violation Target for today is 2058.75. Price will need to recover 2069.75 and Clear & Convert 2081.00 chance for rally.

Today is Cycle Day 2 (CD2)…Odds of Rally > 10 = 83%; Odds of Rally > 20 = 45%; Average Range = 14.50; Max Average Range = 22.50; Possible HOD = 2084.25 based upon average rally; Possible LOD = 2058.75 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

*****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 can recover PL (2069.75) and hold, THEN initial target is 2081.50, followed by 2084.25 – 2087.00 Central Pivot Zone. Strength above this zone targets 2091.50 Average Cycle Rally Target.

Scenario 2: Overnight trade currently gas price below PL (2069.75)…Failure to recover above this level keeps the downtrend solidly intact, targeting expansion levels 2065.00 – 2063.00 STATX Zone, with deep extreme CD2 Violation Target 2058.75.

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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