Trade Strategy 09.18.15


Sentiment in the stock markets was weak on Friday, after Fed Chair Janet Yellen decided to take a “little bit more time to evaluate the likely impacts” of recent market volatility before acting on interest rates. Although low rates have helped fuel years of rising share prices, markets are drawing little comfort from the decision as many investors feel a rate hike would have signaled the central bank’s confidence about economic growth. U.S. futures are all lower by about 1%.

Today’s Economic Calendar

10:00 Leading Indicators

PTG Trading

FED Interest Rate Decision is now history…NO CHANGE…for now…YELL 1991.00…This clearly hints at an economy not as robust as initially perceived…Global weakness, turmoil and volatility clearly weighed heavily in the Fed’s decision process. Intra-day price volatility spiked as no surprise…At days end Market on Close (MOC) Sell Imbalance topped $1B. So the large institutional money managers were clearly in “Sell the Decision” mode.

Overnight trade has price lower by 20 handles to 1955.25 which is today’s CD2 Violation Target…Quad-Witching is on tap for today, so expect continued price volatility.

Today is Cycle Day 2 (CD2)…NORMAL NEUTRAL SPILL UP…This Cycle is ABERRANT, so what normally is expected has shifted…Price now must probe for that new cycle low from which to stage the next rally…The Decline did begin NORMALLY on CD1 and is currently continuing…Once price establishes a secure “confirmed” low, only then can the next rally begin.

Odds of Rally > 10 = 84%; Odds of Rally > 20 = 45%; Average Range = 14.75; Max Average Range =  22.50; Possible HOD = 1975.00; Possible LOD = 1950.00.

***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 current trading at lower Violation Level (1955.50)…Price will need to find a secure low to stage rally (bounce). IF price can hold at or above 1950 – 1955 zone THEN upside initially target 1062.50 – 1967.50 zone. Above this zone target 1975.50 SPOT.

Scenario 2: Price decline has already achieved lower targets (1955.50) CD2 Violation Level. Should continued selling be dominant during cash session, additional lower levels will be in-play, such as, 1950, 1942.50, 1936.50 SPOTS.

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.”


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