Chinese shares rallied overnight after the PBOC cut its reserve requirement ratio to free up liquidity, while downbeat manufacturing surveys raised hopes for additional stimulus measures. The official Purchasing Managers’ Index fell to 49.0 in February, marking the lowest reading since November 2011, while the Caixin/Markit Manufacturing PMI dropped to 48.0, contracting for the 12th straight month. Despite the grim data, China’s services sector continued to expand, but at its slowest pace since late 2008.
In Asia, Japan +0.4% to 16086. Hong Kong +1.6% to 19407. China +1.7% to 2733. India +3.4% to 23779.
In Europe, at midday, London +0.7%. Paris +0.8%. Frankfurt +1.6%.
Futures at 6:20, Dow +0.8%. S&P +0.9%. Nasdaq +0.9%. Crude +1.4% to $34.23. Gold +0.6% to $1241.20.
Ten-year Treasury Yield flat at 1.75%
(Source: Seeking Alpha)
8:55 Redbook Chain Store Sales
9:45 PMI Manufacturing Index
10:00 ISM Manufacturing Index
10:00 Construction Spending
2:00 PM Gallup US ECI
Morning Session rally dovetailed nicely into normal neutral up for Cycle Day 2 as price reached 1953.77 HOD projection. Early strength reversed into Afternoon Session weakness and the end of month “walk-away” trade took full control as MOC Sell Imbalance topped $700M.
Overnight trade initially pushed lower to 1921.50, which is today’s LOD projection…then has rallied higher to reach 1947.00 which is today’s HOD projection. 10 Day Average True Range has stabilized at 26.25 handles.
Today is Cycle Day 3 (CD3)…SPILL UP…Having pushed lower in prior session, odds (73%) favor a successful 3 Day Rally back above CD1 Low (1941.75)…Continued strength above 1947.00 SPOT projects 1952.00 – 1955.50 STATX Zone.
Range Projections and Key Levels:
HOD Range Projection = 1947.00; LOD Range Projection = 1921.50; CD3 Maximum Penetration Level = 1972.30; CD3 Maximum Violation Level = 1912.53; Cycle Day 1 Low = 1941.75; 3 Day Central Pivot = 1942.75; 3 Day Cycle Target = 1980.30; 10 Day Average True Range = 26.25.
**Note: The odds highlighted are NOT predictions or trade recommendations, rather a guide based upon historical observed occurrences.
Today’s Hypotheses: March 2016 (H) 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: IF price can clear and convert 1937.00, THEN initial upside objective is 1947.00…Strength above this level targets 1952.00 – 1955.50 STATX Zone. Convert 1955.50 should offer some clear sailing for bulls.
Scenario 2: Failure to convert 1947.00, which is today’s HOD Range projection keeps price within price structure of lower lows and lower highs. Subsequent violation and conversion of 1937.00 Central Pivot opens door for deeper move lower targeting 1932.50 followed by possible retest of 1921.50.
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