Three fresh surveys of Chinese economic activity are reviving doubts about a sustainable recovery in the world’s second-largest economy. The nation’s May manufacturing PMI came in at 50.1, unchanged from April and barely above the neutral 50-mark. A similar survey showed activity in China’s services sector expand at a slower pace, with the official reading dipping to 53.1 from 53.5 the month before. Meanwhile, the Caixin manufacturing PMI index slipped to 49.2, marking the 15th consecutive month of contraction and the lowest reported figure since February.
In Asia, Japan -1.6% to 16956. Hong Kong -0.3% to 20761. China -0.1% to 2914. India +0.2% to 26714.
In Europe, at midday, London -0.7%. Paris -0.7%. Frankfurt -0.6%.
Futures at 6:20, Dow -0.3%. S&P -0.3%. Nasdaq -0.3%. Crude -1.6% to $48.32. Gold +0.1% to $1218.60.
Ten-year Treasury Yield flat at 1.83%
(Source: Seeking Alpha)
7:00 MBA Mortgage Applications
8:15 ADP Jobs Report
8:30 Gallup U.S. Job Creation Index
8:55 Redbook Chain Store Sales
9:45 PMI Manufacturing Index
10:00 ISM Manufacturing Index
10:00 Construction Spending
2:00 PM Fed’s Beige Book
Tuesday’s Session was as near perfect a Cycle Day 1 (CD1) as can be…Failure to exceed Cycle Day 3 (CD3) and subsequent violation and conversion of 2095.00 SPOT opened door to anticipated decline. Selling accelerated throughout the afternoon until price reached projected Violation Level (2087.00)..At which time reversal rally ensued back to Volume Trend / Point of Control (VTMP) at settlement.
Today is Cycle Day 2 (CD2)…Normal is for some back n fill, perhaps even to test CD1 Low (2086.00) to confirm a “secure low”. Should this low fail to hold this would suggest price needs to auction lower to find strong enough responsive buyers for secure cycle low. Only once this low can be found then this cycle’s rally can begin. Bulls will need to recapture 2097.00 SPOT and convert to upper support for higher prices.
Range Projections and Key Levels: June (M) Contract
HOD Range Projection: 2103.67; LOD Range Projection: 2085.83; CD2 Max Penetration Level: 2112.25; CD2 Max Violation Level: 2074.00; Cycle Day 1 Low: 2086.00; 3 Day Central Pivot: 2097.00; 3 Day Cycle Target: 2110.00; 10 Day Average True Range: 16.42
**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 can hold at or above PL (2086.00), THEN initial upside objective is to convert 2093 – 2095 to solid support. Next would be to then clear and convert 2098 handle which would open upside to retest 2103 handle.
Scenario 2: Violation and conversion of PL (2086.00) to resistance opens door for further selling initial targeting 2082 – 2080 zone. Failure to find responsive buyers in sufficient quantity opens an “price-pocket” down to 2074.00 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.”
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