The Fed-fuelled rally that catapulted equities out of the summer doldrums this week is showing some signs of fatigue. Despite the downward movement, there is plenty of Fedspeak on the calendar to keep investors busy for the rest of the day. Fed Presidents Patrick Harker, Loretta Mester and Dennis Lockhart are set to appear on a “Presidents’ Perspectives” panel, Neel Kashkari will host a Twitter Q&A and Robert Kaplan will give his post-Fed meeting views at a speech in Houston.
Saudi Arabia has offered to lower its oil production if Iran agrees to cap output this year at its current level of 3.6M bpd. The proposal was made earlier this month, sources told Reuters, and would be a major compromise ahead of talks in Algeria next week. Ironic? The last two OPEC meetings held in the country – in 2004 and 2008 – led to unexpected production cuts to prop up prices.
In Asia, Japan -0.3% to 16754. Hong Kong -0.3% to 23686. China -0.3% to 3033. India -0.4% to 28668.
In Europe, at midday, London -0.1%. Paris -0.5%. Frankfurt -0.3%.
Futures at 6:20, Dow -0.1%. S&P -0.1%%. Nasdaq -0.1%%. Crude +0.2% to $46.40. Gold -0.3% to $1341.30.
Ten-year Treasury Yield -2 bps to 1.61%
(Source: Seeking Alpha)
Markets continued to rally post Fed reaching 2166.50 CD2 Max Penetration Level where price consolidated throughout the cash session. Overnight trade has price drifting lower as buyers have pulled away…Initial support zone is marked 2158 – 2160. Fialure to hold opens door to deeper corrective move.
Today is Cycle Day 3 (CD3)…Having reached upper maximum cycle price targets, the next decline can begin at any time.
Range Projections and Key Levels
**Note: The odds highlighted are NOT predictions or trade recommendations, rather a guide based upon historical observed occurrences.
Today’s Hypotheses: September (Z) 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 will need to hold above 2162 handle and convert 2168 to new upper support to continue the current upswing. Upper target measures 2175 – 2178 STATX Zone.
Scenario 2: Initial Sign of Weakness (SOW) would be a violation of 2162 handle with confirmation below 2158 – 2160 key support zone. IF this occurs, THEN deeper downside may unfold targeting 2154.75 – 2152.50 lower STATX Zone.
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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