Markets in Asia got off to a downbeat start despite a solid session stateside which saw the Dow close above 18,000. Consumer inflation in China eased for the first time in eight months, rising an annual 2% in May, while the Nikkei fell under pressure due to a strengthening yen and Japanese machine orders that plunged 11% M/M. While some of the decline can be attributed to the Kumamoto earthquakes, the figure likely means the nation’s business investment will remain weak for most of 2016.
A Fed rate hike looking even less likely? The dollar has hit a five-week low against the yen, hurt by falling Treasury yields amid waning expectations the FOMC will lift interest rates anytime soon. The outlook also sent German 10-year Bund yields to a new record low of 0.034%, not far from the negative territory at which trillions of dollars worth of global bonds already trade, and is pushing world equities into the red.
In Asia, Japan -1% to 16668. Hong Kong closed. China closed. India -1% to 26763.
In Europe, at midday, London -0.9%. Paris -0.9%. Frankfurt -1.3%.
Futures at 6:20, Dow -0.3%. S&P -0.4%. Nasdaq -0.4%. Crude -0.8% to $50.81. Gold -0.1% to $1261.10.
Ten-year Treasury Yield -2 bps to 1.68%
(Source: Seeking Alpha)
8:30 Initial Jobless Claims
9:45 Bloomberg Consumer Comfort Index
10:00 Wholesale Trade
10:30 EIA Natural Gas Inventory
1:00 PM Results of $12B, 30-Year Note Auction
4:30 PM Money Supply
4:30 PM Fed Balance Sheet
Price held 2111.50 key support in prior session and rallied early to retest 2118.00 level as outlined in Scenario 1 of prior DTS Briefing 6.8.16. Price could not hold solid bid for very long as sellers continued to absorb any buying interest. We will mark 2118 as “Key Resistance” for this Cycle Swing.
Today is Cycle Day 2 (CD2)…Expectation is for some back n fill trade to find renewed buying interest perhaps at lower levels as recent buying which drove price to highs has been exhausted. Price is currently trading within 3 Day Central Pivot zone (2111.50 – 2109.50 Support Zone. This zone will need to hold for further upside potential for the bulls.
***Special Note: Contract Rollover adjust pricing by approximately 9 handle discount for September (U) versus June (M) contracts.
Range Projections and Key Levels: June (M) Contract
HOD Range Projection: 2121.25; LOD Range Projection: 2106.00; CD2 Max Penetration Level: 2118.75; CD2 Max Violation Level: 2090.00; Cycle Day 1 Low: 2097.75; 3 Day Central Pivot: 2110.25; 3 Day Cycle Target: 2121.75; 10 Day Average True Range: 12.30
**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 with 3 Day CPZ (2111.50 – 2109.50)…IF Price can hold solid bid THEN initial upside objective is to recapture 2114.75 Central Pivot to support.
Scenario 2: Violation and conversion of 2109.50 to resistance suggests buyers are weak and further downside may unfold to test Cycle Day 1 Low (2106.50).
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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