Trade Strategy 08.03.15


Today’s economic calendar:
Auto sales
8:30 Personal Income and Outlays
8:30 Gallup US Consumer Spending Measure
9:45 PMI Manufacturing Index
10:00 ISM Manufacturing Index
10:00 Construction Spending


In Friday’s DTS Report we stated: “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.”

In last Friday’s Session, price had difficultly maintaining bid above the 2106.75 level, which ultimately lead to initial decline as anticipated. We also stated in 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…” Currently the overnight low is 2093, well within context of stated pullback zone…Our expectation for today is continued “back n fill” price action between 2103 – 2093 Ten-Handle Range.

Today is Cycle Day 1 (CD1); Odds of Decline > 10 = 72%; Odds of Decline > 20 = 41%; Average Range = 18.75; Max Average Range = 22.00; Possible HOD = 2117.75 based upon penetration and conversion of CD3 high; Possible LOD = 2088.50 based upon average cycle decline on CD1.

***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: Price has pulled back as anticipated and has found temporary support at 2093.00…IF price can maintain bid above this level and clear and convert 2103 handle, THEN initial upside targets 2106 – 2108 zone. Strength above this zone expands range targeting 2110 – 2112 zone, followed by 2114.25 – 2117.75 CD1 Penetration Target.

Scenario 2: Being Cycle Day 1, odds (72%) favor a minimum decline of 10 handles measured from PH (2108.50), which has been fulfilled with a current overnight low 2093.00. Violation of this level during cash session opens door for continued decline to find a new “secure cycle low”…Levels to be mindful of are 2091.50, followed by 2088.50 (Average Cycle Decline Target)…Below this level measures 2084 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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