Just five days ahead of the much anticipated oil producers’ meeting in Doha, Iraq’s OPEC governor Falah Alamri has extended his support for an output freeze agreement by stating “this is the only way” to boost crude prices. Although at least 15 major oil producers (that account for 75% of the world’s oil production) are scheduled to attend the summit this weekend, several sticking points remain, including Iran and Saudi Arabia’s participation and the level at which production should be frozen. The optimism boosted Brent crude futures to a 2016 high of $43.53/bbl overnight, while WTI gained $0.39 to $40.75 a barrel.
In Asia, Japan +1.1% to 15929. Hong Kong +0.3% to 20504. China -0.3% to 3024. India +0.5% to 25146.
In Europe, at midday, London flat. Paris +0.2%. Frankfurt +0.4%.
Futures at 6:20, Dow +0.2%. S&P +0.3%. Nasdaq +0.3%. Crude +0.9% to $40.75. Gold +0.1% to $1258.70.
Ten-year Treasury Yield +3 bps to 1.76%
(Source: Seeking Alpha)
8:30 Import/Export Prices
8:55 Redbook Chain Store Sales
9:00 Fed’s Harper: Economic Outlook
1:00 PM Results of $24B, 3-Year Note Auction
2:00 PM Treasury Budget
3:00 PM Fed’s Williams: Monetary Policy
4:00 PM Fed’s Lacker speech
Price tested the Cycle Day 3 High in prior session and failed to hold bid, setting up a reversal, progressively selling until price reached 2033.62, which was Cycle Day 1 projected Average Cycle Decline. All-in-All…Textbook Cycle Day 1 trade session.
Today is Cycle Day 2 (CD2)…NEUTRAL SPILL UP…Having reached Cycle Average Decline (2033.62)…expected trade today is to absorb any additional selling above CD1 Low (2032.50). Once Mr. Market is confident of “secure low”, then the rally can begin in earnest. Price will need to stabilize and hold bid above 2041.25 for the rally to unfold.
Range Projections and Key Levels: June (M) Contract
HOD Range Projection = 2051.77; LOD Range Projection = 2020.48; CD2 Maximum Penetration Level = 2069.13; CD2 Maximum Violation Level = 2014.89; Cycle Day 1 Low = 2032.50; 3 Day Central Pivot = 2041.25; 3 Day Cycle Target = 2064.14; 10 Day Average True Range = 22.52.
**Note: The odds highlighted are NOT predictions or trade recommendations, rather a guide based upon historical observed occurrences.
Today’s Hypotheses: June (M) 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 holds above PL (2032.50) THEN 1st objective is to clear and convert 2041.25 3 Day Central Pivot. IF this occurs, THEN upside objective measures 2051.77. Above this level range expansion can occur targeting 2055.50, with extremes 2064.14.
Scenario 2: Failure to convert 2041.25 and subsequent violation of PL (2032.50) opens trap door initially targeting 2028.75 – 2026.00 STATX Zone. Below this zone measures 2020.48 down to 2014.89 CD2 Maximum 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