Trade Strategy 08.26.15


U.S. stock index futures are heading sharply higher after a failed attempt to rally from the Dow’s worst 3-day point decline in history and the loss of $900B in the S&P 500 over the last two sessions. Traders keep finding it difficult to know where to turn, with global indices flipping wildly between gains and losses. Wednesday’s markets are expected to take their cue from the action in China again, but there will also be plenty of speculation about the Fed and when it might raise rates. U.S. Futures: Dow +1.3%; S&P 500 +1.3%; Nasdaq +1.2%

Today’s Economic Calendar

7:00 MBA Mortgage Applications
8:30 Durable Goods
10:30 EIA Petroleum Inventories
11:30 Results of $13B, 2-Year FRN Auction
1:00 PM Results of $35B, 5-Year Note Auction


“The Thrill of Victory…and the Agony of Defeat” 

Sharp rally early in the Session gave traders hope that the worst was over, only to have those hopes and dreams (think nightmares) dashed away as late Session Market on Close (MOC) Sell Imbalance of $3.2 Billion thrashed any “relief rally”. In overnight trade price found buy response at 1850 handle and is currently higher by 60 handles to 1910.00. We made special note of the 1910 handle in prior DTS Reports as this level remains a KEY SPOT for bulls to convert. IF converted, THEN initial upside measures 1930 followed by 1950 respectively.

Today is Cycle Day 3 (CD3)…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 1910 handle up to 1950 SPOT.

***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 can hold above 1895.00 during cash session and convert 1910 SPOT, THEN upside target 1923.75 3D CPZ. Above this level measures 1940 – 1950 zone.

Scenario 2: Initial resistance is marked between 1923 – 1933 zone. Failure to clear and convert this zone and subsequent violation of 1895 handle keeps sellers in control with possible retest of 1850 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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