Equities across the globe are drifting into the red ahead of a data heavy week in the U.S. that will include retail sales, inflation and other economic figures. Reasons for the declines: Brexit woes, weak Chinese investment growth, fresh strength in the yen, slipping oil prices and the worst mass shooting in U.S. history (see all below). Traders are also anticipating a busy week for central banks with Fed, BOJ, SNB and Bank of England meetings.
With ten days to go until a Brexit vote, the “Leave” campaign has taken a lead over “Remain” in the latest YouGov poll, reversing the one point lead held by the pro-EU camp in the last survey taken on June 6. Another poll from research firm ORB showed that 55% of British citizens felt they should leave the EU, versus 45% who favored staying. Sterling has taken another leg down this morning, falling 0.7% to $1.4150.
In Asia, Japan -3.5% to 16019. Hong Kong -2.5% to 20512. China -3.2% to 2833. India -0.9% to 26396.
In Europe, at midday, London -0.3%. Paris -1.4%. Frankfurt -1.3%.
Futures at 6:20, Dow -0.4%. S&P -0.4%. Nasdaq -0.5%. Crude -1.1% to $48.52. Gold +0.9% to $1287.20.
Ten-year Treasury Yield -2 bps to 1.61%
(Source: Seeking Alpha)
No events scheduled
Nervous traders/investors liquidated long positions on Friday as the looming Brexit vote on June 23rd is creating high anxiety levels and “risk-off” seems the safest bet. Friday was Cycle Day 3 and markets failed to get a positive 3 day rally, so in principle this is a bearish sign unless negated on early this week.
Today is Cycle Day 1 (CD1)…NORMAL SPILL DOWN…There is room for the decline which began on Friday to continue…Currently in overnight trade price has Average Cycle Decline of 2078.50. This could be a potential floor should the buyers step-in aggressively to buy the weakness. Failure to find sufficient buying interest opens door to probe lower for secure low.
Range Projections and Key Levels: Sept (U) Contract
HOD Range Projection: 2091.45; LOD Range Projection: 2070.50; CD1 Max Penetration Level: 2110.25; CD1 Max Violation Level: 2073.00; Cycle Day 1 Low: 2097.75; 3 Day Central Pivot: 2100.00; 3 Day Cycle Target: 2102.00; 10 Day Average True Range: 14.45
**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: Price is currently trading pre-cash at 2078.50 which is the Average Cycle Decline Target…IF price can hold this level during cash session, THEN potential exists for a rebound rally targeting 2090.50 Central Pivot. Strength above this level furthers the rally to 2100 potential.
Scenario 2: Violation and conversion of 2078.50 to resistance continues the long liquidation which began Friday. Lower levels to consider are 2075…2073…down to 2070.50.
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.”
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