Stock market volatility in China extended as the Shanghai Composite Index shed 3.6% to mark its sharpest drop in three weeks. The index barely held onto the psychologically critical 3,000 level. The Hang Seng lost 0.5% and the major index in Australia was off 1.5%. The yen broke back higher after the Bank of Japan held rates steady. The central bank warned on slowing demand from emerging markets. European stocks are mildly lower in mid-day trading. Traders across the Atlantic indicate uncertainty over the U.S. Federal Reserve’s interest rate decision later this week is holding back action. U.S. stock index futures point to a minor downtown at the open as caution ahead of the Fed meeting locks down investors.
8:30 Retail Sales
8:30 Empire State Mfg Survey
8:55 Redbook Chain Store Sales
9:15 Industrial Production
10:00 Business Inventories
S&P e-mini traded lower throughout session to reach 1940 SPOT as it was NORMAL SPILL DOWN for Cycle Day 1 (CD1). The best trade opportunities of the session came early in form of Premiums but by lunchtime and remainder of day was sideways quiet consolidation. Overnight trade price has retested PL (1936.50) and has bounced higher by 10 handles to 1936.50.
Today is Cycle Day 2 (CD2)…NORMAL NEUTRAL SPILL UP…Odds if Rally > 10 = 84%; Odds of Rally > 20 = 45%; Average Range = 14.50; Max Average Range = 22.50; Possible HOD = 1962 (based on Average Rally); Possible LOD = 1918.50 (based on Violation of CD1 Low).
***Note: The odds highlighted are NOT predictions or trade recommendations, rather a guide based upon historical observed occurrences.
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 has rested PL (1936.50) and has bounced higher by 10 handles during overnight trade…It will be important for Bulls that this low is not violated during cash session. The next objective is to Clear and Convert 1948 SPOT in order to force a short squeeze and get price higher targeting 1959 – 1962 Average Cycle Rally Targets.
Scenario 2: IF PL (1936.50) is Violated and Converted, THEN this may force some long liquidation targeting 1933 SPOT followed by 1925.50 SPOT with deep Violation Extreme measured at 1918.50.
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!
“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