Trade Strategy 09.23.14

S&P e-mini has now violated the FED Day Low (1983.25) in overnight trade. Should this violation hold during the Pit Session when volume participation is at it’s greatest, this would certainly qualify as a “Change of Character” (COC) in market sentiment. Divergences are already abound across indexes, internals and sectors, so a definitive negative shift in would increase probabilities of lower prices.

Today begins a new cycle which typically is weak on Cycle Day 1 (CD1) to probe for a new “secure low”. The Average Cycle Decline has already been achieved during yesterday’s weak trade session…Further weakness would target cycle expansion zones.

Odds of Decline > 10 = 70%; Odds of Decline > 20 = 40%; Average Range on CD1 = 18.75; Max Range = 21.75 Cycle Target = 1979.75.

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

Today’s Hypotheses:

Scenario 1: Price is currently trading below PDL (1982.50)…IF price can secure a firm bid and convert this level, THEN odds favor retracing back to 1992 – 1994 3D CPZ, where there is anticipated to be a sell response. Any price action above this zone, targets will be updated in trading room.

Scenario 2: Should price fail to convert PDL (1982.50), THEN this suggests sellers are dominant force, which may increase likelihood of some long liquidation. Downside levels to be mindful of are: 1979 – 1977 STATX Zone; 1975.50 – 1974.50; 1971.50 – 1969.65 TargetMaster Breakdown Level.

Trade Strategy: We have not given up on the bullish case just yet, as prior pullbacks of recent magnitude have been absorbed and prices have reversed back higher. That said, we now respect the recent strength of the sellers…Remaining flexible to either Long / Short Trade is the hallmark of a disciplined trader…Simply, “not fighting the tape”…We remain steadfast with our trade methodology, focusing on executing Bull/Bear Stacker and Premium and Discount Setups.

Remain Focused…Take the Trade…ALWAYS USE STOPS!

Good Trading…David

Habitude Ten
I know anything can happen, and I can handle anything that does happen. I am open minded. My thoughts and perceptions are clear. I know what to look for. I have rehearsed everything. I adapt to change. I will listen to my indicators and the patterns that emerge. I will adjust and not demand that things continue as they first started.


Leave a Reply