Price of S&P e-mini traded in a very narrow 4 handle range in prior session, influenced by Thanksgiving Holiday week…typically volumes contract significantly, so no real surprise. Nasdaq (NQ) and Russell (TF) were the out-performers on a relative basis…We should be expecting more of the same in terms of volume contraction the remainder of this week…Friday will be half-day trading, so we will take that opportunity to enjoy the day-off.
Today begins a new Cycle Day 1 (CD1)…Typically we would be anticipating some price weakness as exploration for new “secure low”…Holiday trade action may disrupt the normal cyclic patterns this week, but this is usually just temporary…Don’t read too much into trade action unfolding this week.
Odds of Decline > 10 = 71%; Odds of Decline > 20 = 41%; Average Range on CD1 = 18.75; Max Range = 21.75; Possible High = 2075 – 2077 zone based upon clearing and converting CD3 high; Possible Low = 2054 – 2050 based upon average decline combined with violation of CD3 low.
***Note: The odds highlighted are NOT predictions or trade recommendations, rather a guide based upon historical observed occurrences.
Today’s Hypotheses:
Scenario 1: Residual bullish momentum could continue today…IF so, THEN clearing and converting PDH (2069.00) places odds at 55% for price reaching higher to 2070.50 – 2072.00 zone, followed by 2075.00.
Scenario 2: Low volumes and day type could restrict any significant upside, so failure to successfully convert PDH (2069.00) places higher odds (71%) of decline greater than 10 handles…Keep in mind that holiday could skew either of these scenarios…Violation of 2064 would place trade dominance back into Bear Camp. Levels to be mindful of on pullbacks are: 2066 – 64 zone (CPZ); 2061.75 – 2060.75 STATX Zone; 2059.25 – 2056.75 (3D CPZ).
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 of 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
Habitude Seven
I take the long term view. I am willing to lose in the short term. I understand that losses are a necessary cost of doing business, like inventory to a merchant. Drawdowns are viewed as temporary. I realize that my wins and winning periods are part of the broad process. Each trade is but one in a string of trades. What is happening now is one piece of a much larger puzzle. Because of this I do not get overly euphoric or despondent.
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS