Trade Strategy 09.02.15


World markets are on track for a calmer day after the Shanghai Composite stabilized following a shaky start to Wednesday trading. Nine Chinese brokerages pledged additional funds worth over 30B yuan to purchase shares, the China Securities Journal reported, answering fresh government calls to support equities. Investors may see the trend continue. Shanghai’s stock market will be closed Thursday and Friday as China commemorates the 70th anniversary of the end of World War II.

Today’s Economic Calendar

7:00 MBA Mortgage Applications
8:15 ADP Jobs Report
8:30 Productivity and Costs
8:30 Gallup U.S. Job Creation Index
10:00 Factory Orders
10:30 EIA Petroleum Inventories
2:00 PM Fed’s Beige Book


Yesterday was Cycle Day 1 and expectation was for SPILL DOWN, which did NOT disappoint. Gap open lower held any attempt to get back above 1931 SPOT. Failure and subsequent violation of 1918 was the “death-nell” for the bulls. Accolades go out to PTG Member Roberto Salas for highlighting key level 1899 “before” actually getting tagged as LOD was 1898.75.

[ Tue Sep 01 2015 15:37:43 (Eastern Daylight Time) ] Roberto Salas: Dangerously close to psychological 1899 handle.

Today is Cycle Day 2 (CD2)…SPILL NEUTRAL/UP  Key ingredient here is for 1931 SPOT to convert for bulls…Bears want to cap (hold) this level.

Odds of Rally > 10 = 83%; Odds of Rally > 20 = 45%; Average Range = 14.50; Max Average Range = 22.50; Possible HOD = 1959.50; Possible LOD = 1880.50.

***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: Market closed weak in prior range but has since bounced higher in overnight trade. IF price can hold above 1919.50, THEN odds (83%) favor higher to test 1931 SPOT. Should this level be converted, upside can extend targeting 1959.50 3D CPZ.

Scenario 2: Key level for bears to defend is 1931 SPOT…IF successful in repelling any rally attempt, next objective is to kill ONL (1919.50). Should this occur downside would be retest of PL (1898.75)…Violation and conversion of this level targets STATX Zone 1892.25 – 1884.25.

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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