Trade Strategy 08.25.15


Global markets look to regain their footing after a harsh start to the week. Leading Asian markets fell again with the Shanghai Composite Index closing with a 7.6% loss and the Nikkei down 4.0%, while other key Asian markets closed with milder losses and Hong Kong ended up in positive territory. European markets are broadly higher with the Stoxx Europe 600 up a solid 3.1%, led by the first rise in the FTSE 100 in 11 sessions. Oil is also trying to stage a comeback with WTI crude retaking the $39 level. Economists expect global supply will start drying up next quarter if oil stays below the $40 level.

Today’s Economic Calendar

8:55 Redbook Chain Store Sales
9:00 FHFA House Price Index
9:00 S&P Case-Shiller Home Price Index
10:00 Consumer Confidence
10:00 State Street Investor Confidence Index
10:00 Richmond Fed Mfg.
10:00 New Home Sales
1:00 PM Results of $26B, 2-Year Note Auction


S&P emini opened limit down 1870.00 and continued to fall to second limit down 1831.00 (yes, that is not a typo) before rallying 120 handles, again reversing down. Multiple intra-day swings saw price whip up and down 10 – 20 handles in “seconds” as computerized algos made even the most seasoned trading veteran watch in total amazement in the breathtaking price swings. It was truly a Wild West classic version “digital-binary” shootout.

Overnight Trade has price range at 76.75 handles as price tested the lower edge of yesterday range to find buy response at 1875.00 which we will mark as KEY SUPPORT. Upside Resistance is marked at 1950.00.

Today is Cycle Day 2 (CD2)…We will be looking for markets to find some stabilization today, though price volatility should remain very high. Odds (83%) favor a strong rally attempt to clear through yesterday’s high (1950.75)…Any pullback in price is anticipated to find buy response between 1888.00 – 1912 zone.

***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 PH (1950.75), THEN initial upside targets 1964 – 1982.50 Three Day Central Pivot Zone. Above this zone price can vault to 2050.00 SPOT.

Scenario 2: Failure to convert PH (1950.75) keeps price within prior day’s range…Initial support is marked at 1898.00 SPOT, followed by 1888.75 – 1879.50, with KEY SUPPORT marked at 1875.00 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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