Markets
S&P 500 futures triggered another ‘limit down’ trading halt overnight after tumbling 5%, even after the Fed embarked on a massive monetary stimulus campaign to cushion the U.S. economy from the coronavirus pandemic. Interest rates were slashed to near zero, while the central bank said it would buy $700B in Treasury and mortgage-backed securities. It’s also letting banks borrow from the discount window for as long as 90 days and reducing reserve requirement ratios to zero percent.
Crude futures popped nearly 6% after the Fed’s emergency action, but the gain quickly evaporated, with futures now tumbling about 5% to under $30/bbl. The action demonstrates the inability of policy support moves to save oil markets mired in a price war on top of the severely contracting global oil consumption. Meanwhile, gold climbed alongside Treasuries, as investors once again turned to safe haven assets.
Source: Seeking Alpha https://seekingalpha.com/
Economic Calendar
8:30 Empire State Mfg Survey
4:00 PM Treasury International Capital
https://www.investing.com/economic-calendar/
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S&P 500
Prior Session was Cycle Day 3 (CD3)…Thursday was CD2 with price closing on its lows. Expectation was for “violation” of CD2 Low on CD3 which occurred during GLOBEX Session. Price found support near the targeted violation zone and eventually reversed back above CD2 Low. This was a Cycle BUY Signal as objective for the Bulls was to recover CD1 (Buy Day) Low 2702.75. Price churned all day until the final 15 minutes, where end of day strong rally did in-fact recover the CD1 Low, fulfilling Positive 3 Day Rally Statistic (91% probability of occurring). Today (Friday/CD3) was a Taylor Textbook Cycle Day 3.
This leads us into today’s Cycle Day 1 (CD1)…Normal for CD1 is some magnitude decline (that’s an understatement!), as price is currently at 2555.50, which is 5% LIMIT DOWN and expected to open minus 9.5%. We’ll need to see how Cash Markets handle the limit conditions.
Please review the NYSE Circuit Breaker Rules in the section below.
Stock index futures in the U.S. plunged the 5% limit overnight, triggering limit-down rules, meaning only transactions at or above that threshold are allowed. Once the market opens, NYSE circuit breakers will work like this: trading halts for 15 minutes if the S&P 500 falls 7% at any time before 3:25 p.m. ET. Another 15-minute pause is triggered if losses reaches 13%. If the decline hits 20%, markets will close for the day
Overseas Markets are currently trading in negative territory, while US Markets are bracing for a minus 9.5% opening bell. VIX = 69.75
We’ll keep the “High Surf Warning” for today’s session.
P-VA High = 2694 P-VA Low = 2540 P-POC = 2570
Bull Scenario: IF Bulls hold bid above 2555, THEN initial upside estimate targets 2590 – 2640 zone
Bear Scenario: IF Bears hold offer below 2555, THEN initial downside estimate targets 2368 – 2326 zone.
Range Projections and Key Levels (ES) June 2020 (M) Contract
HOD ATR Range Projection: 2752.00; LOD ATR Range Projection: 2453.00; 3 Day Central Pivot: 2630.00; 3 Day Cycle Target: 2710.00; 3 Day Average True Range 222; VIX: 69.75
Nasdaq 100 (NQ)
Today is Cycle Day 1 (CD1)…Normal for CD1 is some magnitude decline (that’s an understatement!), as price is currently at 7541, which is 5% LIMIT DOWN. We’ll need to see how Cash Markets handle the limit conditions.
P-VA High = 7600 P-VA Low = 7343 P-POC = 7500
Bull Scenario: IF Bulls hold bid above 7541, THEN initial upside estimate targets 7700 – 7750 zone.
Bear Scenario: IF Bears hold offer below 7541, THEN initial downside estimate targets 6893 – 6770 zone.
Range Projections and Key Levels (NQ) June 2020 (M) Contract
HOD ATR Range Projection: 8076.00; LOD ATR Range Projection: 7384.00; 3 Day Central Pivot: 7700; 3 Day Cycle Target: 8000.00; 3 Day Average True Range: 653; VIX: 69.75
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!
Good Trading…David
“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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