Shanghai was sharply lower early in the session, but managed to eke out a 0.3% gain by the end Monday’s trade. Hong Kong also finished in the green, adding 0.4%. The Nikkei closed off its lows, but still fell 1.3%. Europe’s Stoxx 50 is down 0.9% after a bounce off opening lows failed to take hold. U.S. stock index futures have been moving between gains and losses, but the S&P 500 is currently lower by 0.15%. Nasdaq 100 futures are down 0.4%. All eyes will be on the healthcare sector this week, particularly biotech, after its worst weekly plunge since the financial crisis. Also on tap Friday is the employment report for September.
Monday’s economic calendar:
8:30 Personal Income and Outlays
10:00 Pending Home Sales
10:30 Dallas Fed Manufacturing Survey
1:30 PM Fed’s Evans: U.S. Monetary Policy
5:00 PM Fed’s Williams Speech
Having reached Cycle Target 1947.25 early in Friday’s overnight session, we knew odds (72%) were favorable for Cycle Day 1 (CD1) NORMAL SPILL DOWN…We were not disappointed as price closed within lower 25 quartile of session range.
In overnight trade today price bounced to 1923 – 1925, which is declining trend 3 Day Central Pivot Zone. Until price clears and converts down structure dominant trend remains down, with increasing potential to test August Low.
Today is Cycle Day 2 (CD2) NEUTRAL SPILL UP…Odds of Rally > 10 = 84%; Odds of Rally > 20 = 45%; Average Range = 14.50; Max Average Range = 22.50; Possible HOD = 1925.50 Central Pivot; Possible LOD = 1892.50 CD2 Violation Target.
***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 is currently below CD1 low (1910.25)…Bulls will need to recapture this level to effectuate a rally…IF successful, THEN initial target/resistance is 1918.50 SPOT, followed by 1925.50 SPOT.
Scenario 2: Bears currently have control with price below CD1 Low (1910.25)…IF price cannot recover above this level, THEN more downside is to be expected to flush out longs before the real rally can begin. Downside levels to be mindful of are 1900 ROUNDIE, followed by 1896.75 Average Cycle Decline, then 1892.50 CD2 Violation Level.
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