Trade Strategy 07.31.15


Today’s economic calendar:
8:30 Employment Cost Index
9:45 Chicago PMI
10:00 Reuters/U-of-M Consumer Sentiment


S&P 500 capped this Cycle’s Rally in fitting style by achieving the Average Cycle Rally Target (2106.75) outlined in prior Daily Trade Strategy Report 07.30.15. Any further upside advancement will be “icing on this cycle’s cake”. On the flip side, having reached target, traders may decide to take a break from aggressive buying, allowing price to begin decline (read pullback), to consolidate recent gains.

Today is Cycle Day 3 (CD3)…As stated, Cycle Targets have been achieved, so the decline may begin any time. Unless price can convert 2103.50 KEY SPOT, odds favor decline in price…Conversion of 2103.50 SPOT targets 2108….2112…2115 handles.

Odds of 3D Rally > 10 = 82%; Odds of Rally > 20 = 54% (achieved); Average Range = 17.75; Max Average Range = 21.50; Possible HOD = 2112.00 based upon penetration of CD2 high; Possible LOD = 2086.25 based upon average range 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 2103.50, THEN upside initially projects 2108.00, followed by layered levels 2110.50, 2112, 2114, 2115.75.

Scenario 2: Failure to convert 2103.50 KEY SPOT suggests buyers have been satisfied opening the door for decline (pullback)…Lower levels to be mindful of for renewed buy response are: 2098.00 Central Pivot, 2096.00 – 2094, followed by 2091.50 Three 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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