Trade Strategy 08.24.15


World stock markets fell sharply again as panic selling in China has picked right back up to start the week. China’s stock markets have now wiped out the gains built up during the year. The Shanghai Composite Index closed down 8.5% after the lack of an official policy move from Beijing increased the level of anxiety. Many index futures contracts in China fell by their 10% limit in an indication more selling could unwind. Europe took its cues from Asia and is lower across the board. Dow Jones and S&P 500 futures point lower by close to 2%.

Oil prices plunged to 6.5-year lows as concerns over demand from China rippled across energy markets. Brent crude is below the $45 per barrel level, while WTI crude is back into the $30s. Many industry watchers think prices will fall even further as OPEC producers continue to pour out more oil than needed. Crude futures -3.6% to $38.98/bb.

Today’s Economic Calendar

8:30 Chicago Fed National Activity Index


Major Stock Indexes are gearing up (or is that down) for a lower cash & futures opening today continuing where they finished last week. The normal 3 Day Trading Cycle has clearly been disrupted, so price will need to stabilize and find a natural level where buyers and sellers can agree on…Currently margins calls are dominating the trading landscape as forced selling will need to run is course before a final trade-able low is found

Today is Cycle Day 1 (CD1) and it’s NORMAL SPILL DOWN (That seems so cliche today) to probe for a secure low…The next Major Zone of potential Buy Response is fairly wide between 1910.00 – 1988.00. Price will need to find support then must convert 1940.00 to increase odds of recapturing prior day’s broken low 1968.00.

We’ll be looking for some type of “relief rally” today once the selling is finished…STAY DISCIPLINED and KEEP COOL HEAD.

***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 will need to find a solid buy response above 1910.00 during cash session and then clear and convert 1940 handle to increase odds of a “relief rally.” Upside objective is to at least get back above PL (1968.00), then vault to 1988.00 Daily Pivot.

Scenario 2: Margin selling will add to early price pressure…Wide potential zone of support between 1910.00 – 1988.00…IF price cannot recover back above PL (1968.00), THEN selling may continue unabated.

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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