Markets
Risk-off sentiment is seeping into the markets once again, with traders deciding their next moves as the second quarter kicks off. S&P 500 futures are down 3% and Dow futures are off more than 600 points, following a warning from President Trump that the coming weeks would be “very painful” and White House projections of 100K-240K U.S. deaths from COVID-19. The Dow already recorded its worst quarter since 1987 in Q1, while the S&P 500 logged its worst quarter on record, as the coronavirus pandemic caused a nationwide shutdown of the economy.
Decline was seen overnight as Dow futures slid 762 points, while S&P 500 and Nasdaq futures fell 3.5% respectively.
Source: Seeking Alpha https://seekingalpha.com/
Economic Calendar https://www.investing.com/economic-calendar/
8:15 ADP Jobs Report
9:45 PMI Manufacturing Index
10:00 ISM Manufacturing Index
10:00 Construction Spending
10:30 EIA Petroleum Inventories
Markets are currently trading in negative territory pre-RTH
We’ll keep the “High Surf Warning” posted for the foreseeable future.
S&P 500
Tuesday’s Session was Cycle Day 3 (CD3): As this day is the official “end of cycle”. The expected action of the “BIG BOYZ” is to complete their selling of long contracts to the “johnnie-come-late” buyers and to establish new short positions, in anticipation on the next cycle decline. End of Month/Quarter coincided with a “textbook” CD3 as outlined above, with price selling off into the close.
…Transition from Cycle Day 3 to Cycle Day 1
This leads us into Cycle Day 1 (CD1): Objective for this cycle day is to “probe for a new secure low” from which to begin the next cycle’s rally. It is also highly probable that “Smart Money” had previously established short positions on CD3 after exiting their long positions at the end of the previous cycle.
Forcing a “violation” of previous day’s (CD3) Low (2555.75) would accelerate selling momentum carried over from the previous session which increases smart-money short position profitability as price probes lower to projected CD1 Average Range Decline Target (2533.45). Once reached, open short positions would be expected to begin covering from those selling out longs (at a loss), are “flushed-out”, creating an “excess” or “extreme” cycle low from which “Smart Money” begins to establish new long positions.
Average Decline for CD1 (102.30) as measured from CD3 High (2635.75) projects “Possible LOW” 2533.45 (Exceeded) Violation Low measures 2489 (Fulfilled)
P-VA High = 2613 P-VA Low = 2574 P-POC = 2595
Bull Scenario: IF Bulls hold bid above 2490, THEN initial upside estimate targets 2510 – 2520 zone
Bear Scenario: IF Bears hold offer below 2490, THEN initial downside estimate targets 2470 – 2450 zone.
Range Projections and Key Levels (ES) June 2020 (M) Contract
HOD ATR Range Projection: 2567.00; LOD ATR Range Projection: 2470.00; 3 Day Central Pivot: 2565.00; 3 Day Cycle Target: 2534.00; 10 Day Average True Range 138.00; VIX: 60.00
Nasdaq 100 (NQ)
Today is Cycle Day 1 (CD1)…Price has violated Cycle Day 1 Low (7747.50) and has declined reaching 7562 – 7522 CD1 Statistical Extreme Zone during GLOBEX Session.
P-VA High = 7920 P-VA Low = 7795 P-POC = 7868
Bull Scenario: IF Bulls hold bid above 7575, THEN initial upside estimate targets 7650 – 7670 zone.
Bear Scenario: IF Bears hold offer below 7575, THEN initial downside estimate targets 7525 – 7485 zone.
Range Projections and Key Levels (NQ) June 2020 (M) Contract
HOD ATR Range Projection: 7818.00; LOD ATR Range Projection: 7483.00; 3 Day Central Pivot: 7740.00; 3 Day Cycle Target: 7694.00; 10 Day Average True Range: 400; VIX: 60.00
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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