Trade Strategy 09.16.14

Buyers are acting more cautionary ahead of the two-day Fed Meeting this week. The main topic is whether to begin raising interest rates sooner than anticipated given continued, albeit, slow improvement in underlying economic conditions. Although good for the long-term market prospects, in the short-term there is potential for more downside, as investors seek to lock-in some hefty gains.

Yesterday’s trade was relatively quiet with lower than average range as contract rollover continues. Overnight trade has also been subdued with only 175K changing hands.

Today is Cycle Day 2 (CD2)…Average Cycle Rally = 14.50 – 19.50; Max Cycle Rally on CD2 = 22.25; Odds of Rally > 10 = 83%; Odds of Rally > 20 = 44%; Average Range on CD2 = 14.50; Max Range = 22.25.

***Note: The odds highlighted are NOT predictions, rather a guide based upon historical observed occurrences.

Today’s Hypotheses:

Scenario 1: IF price can rally above and convert 1974 – 1976 zone, THEN there is a 60% chance of reaching PDH (1979.00), then 3DCPZ 1979.75 – 1980.75…Solid conversion of PDH targets 1982.50 – 1984.50 zone with upside Xtremes measuring 1987 – 1990.25.

Scenario 2: Solid resistance has been observed between 1976 – 79 zone recently…Failure to convert this key zone suggests sellers remain dominant which could put additional pressure on price…The recent CD1 Low (1968.00) is vulnerable to a downside violation and conversion unless buyers get more aggressive and clear 1976 – 79 zone. IF CD1 Low is broken, THEN lower levels to be mindful of are 1964.75…STATX Zone 1960.75 – 1957.25.

Trade Strategy: We will remain cautious and selective on setups as most investors/traders are in “wait n see” mode ahead of Fed Policy Statement Wednesday. Two-side trade may continue to be the current tactical strategy until renewed directional bias unfolds. As always, we remain aligned with dominant forces.

Stay Focused…Take the Trade…ALWAYS USE STOPS!

Good Trading…David

Habitude Five
I think in terms of probabilities. I do not know, all I have are probabilities. Probabilities are at the core of my decisions. Through consistent application of the probabilities, I will win.


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