Trade Strategy 08.19.15


The Fed is likely to raise its benchmark interest rate as soon as its next meeting in September, but some officials are still harboring misgivings. An account of the central bank’s most recent get-together, which will be published at 2 p.m. ET today, is likely to describe the extent of those concerns. Keep in mind that the minutes are released with a three-week lag, so they don’t capture precisely how the landscape has changed since July. China’s currency devaluation and a continued slide in oil prices seem to weigh against raising rates, while solid hiring last month supports the case for moving.

Today’s Economic Calendar

7:00 MBA Mortgage Applications
8:30 Consumer Price Index
10:30 EIA Petroleum Inventories
2:00 PM FOMC minutes


Yesterday’s trade pretty much unfolded as expected with NEUTRAL SPILL consolidation day, following strong price performance capping off a perfect Three-Day Cycle sequence. In overnight trade price has pulled down within the 3 Day Central Pivot Zone 2086 – 2084.25 outlined in prior Daily Trade Strategy 08.18.15. The current overnight low is 2084.00…just 1 tic from our projected low and within Margin of Error (MOE).

Today begins a new Cycle with a NORMAL SPILL DOWN to probe for a new secure low. Current price has traded down slightly greater than 10 handles from overnight high (Odds of Decline > 10 = 72%).

Cycle Day 1 (CD1)…Odds of Decline > 10 = 72%; Odds of Decline > 20 = 42%; Average Range = 18.75; Max Average Range = 22.00; Possible HOD = 2108; Possible LOD = 2082.25 based upon average 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 to 2084.00 KEY SUPPORT…IF price can hold above and convert PL (2090.25), THEN upside projects 2095.50 SPOT. Strength above this level targets 2098.00, then 2103.50 SPOTs.

Scenario 2: Violation of 2084.00 KEY SUPPORT projects 2082.00 down to 2079.75 CD1 Violation Level.

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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