Trade Strategy 08.20.15

Economy

Oil prices are continuing to collapse, and the bottom remains elusive because not one of the world’s largest producers is showing any signs of blinking. WTI crude slumped over 4% on Wednesday on data showing an unexpected U.S. supply build of 2.6M barrels, sending prices to levels not seen since early 2009. Oil futures now look set to fall into the $30s per barrel, a low range many analysts did not see coming. Crude futures -1.5% to $40.21/bbl.

Today’s Economic Calendar

8:30 Initial Jobless Claims
9:45 Bloomberg Consumer Comfort Index
10:00 Philly Fed Business Outlook
10:00 Existing Home Sales
10:00 Leading Indicators
10:30 EIA Natural Gas Inventory
4:30 Money Supply
4:30 Fed Balance Sheet

Trading

S&P e-mini continues it’s selling slide which began Tuesday after peaking at 2103.50 SPOT during last Cycle. Price is now down approximately 50 handles from high to hit lower range extreme 2056 handle.

Today is Cycle Day 2 (CD2)…There is high odds (95%) chance of making high above 2066.50 up to 2087.50 with NORMAL SPILL UP today. Projected LOD = 2053.25.

Odds of Rally > 10 = 83%; Odds of Rally > 20 = 45%; Average Range = 14.50; Max Average Range = 22.50; Possible HOD = 2087.50 based upon Average Cycle Rally; Possible LOD = 2053.25 based upon average Violation on CD2.

***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: Pre-Cash open price is trading near 2056 handle…Odds (83%) favor rally greater than 10 handles which would place price back above prior low (2066.50). IF price can clear and convert this level, THEN upside targets 2071.50 and 2075.50 SPOTs.

Scenario 2: Price trading near projected low of day (2053.50) and Violation Target…Should price fail to illicit a strong buy response from this level and subsequent break down, long liquidation would target 2046.50 SPOT.

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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