Trade Strategy 09.11.15

Markets

Crude oil was sharply lower at the time of writing despite the IEA predicting the “largest cut in non-OPEC supply in more than two decades” due to low prices, and as Goldman Sachs warned that crude could collapse to $20 a barrel due to massive oversupply. Twenty bucks isn’t Goldman’s most likely scenario but it’s a nice dramatic number that generates lots of tweets, as were the forecasts by Goldman and others in the not-so-distant past that oil would hit $150-$200 a barrel.

Today’s Economic Calendar

8:30 Producer Price Index
10:00 Reuters/UofM Consumer Sentiment
2:00 PM Treasury Budget

PTG Trading

Solid Cycle Day 2 (CD2) unfolded as scripted, as expectation was for NEUTRAL SPILL UP as price reached projected HOD 1964.75 Target (Sept Contract). Failure to progress higher setup pullback into settlement as MOC Sell Imbalance topped $900M.

E-mini Indexes are in midst of Contract Rollover to December (Z) from September (U), so adjust your charts accordingly.

Today is Cycle Day 3 (CD3)…NORMAL SPILL UP…But rollover may add some cycle confusion as contract volume will be split. Price will need to get above 1945 handle sometime today to qualify for Positive 3 Day Rally.

Odds of 3D Rally > 10 = 82%; Odds of 3D Rally > 20 = 54%; Average Range = 17.75; Max Average Range = 21.75; Possible HOD = 1967.50; Possible LOD = 1900.00.

***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: December (Z) 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 is currently holding above 19222.50 KEY SPOT…IF price continues to hold any test during cash session, THEN odds favor rallying higher to achieve 3D Rally objective above 1945 handle.

Scenario 2: Heavy MOC Sell Imbalance ($900M) plagued bulls yesterday as price settled well off highs and is currently lower in overnight trade. Violation of 1930 opens door to test 1922 handle…Violation and conversion of this level initially targets 1915.50, followed by 1900 CD3 Violation Target.

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

 

*****This trade strategy report is disseminated for “education only” and should not be viewed in any way as a recommendation to buy or sell futures products.”

PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS


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