Yesterday was Cycle Day 3 (CD3)…As such, we knew odds (82%) favored a rally greater than 10 handles, with Average Range on CD3 = 17.75…The full range of day was 18.50, so overall, a very nice way to end the 3-Day Bullish Cycle. Daily Trade Strategy 12.2.14
Today begins a New Cycle (CD1)…If the cycle is back in-sync following last week’s holiday, we would be anticipating a decline at some point today to probe for a new “secure low” from which to stage the next cycle rally. Keep in mind that recent price weakness has been temporary, as “dip buyers” continue to respond to any type of pullback.
Odds of Decline > 10 = 71%; Odds of Decline > 20 = 41%; Average Range on CD1 = 18.75; Max Decline = 21.75; Possible High = 2076.50, based upon penetration and conversion of CD3 high; Possible Low = 2049.50, based upon average decline on CD1.
***Note: The odds highlighted are NOT predictions or trade recommendations, rather a guide based upon historical observed occurrences.
Today’s Hypotheses:
Scenario 1: Price settled in the upper quartile of prior days range…IF this price momentum continues and penetrates and converts PDH (2068.00), THEN there is a 55% chance of price extending to 2070.50 – 2072.50 STATX Zone, followed by cycle expansion target zone between 2074 – 2076.50.
Scenario 2: Failure to convert PDH (2068) and violation of overnight low (2063.25), selling may develop…Should this occur, downside levels to be mindful of are 2060.25 – 2061.50 VTMP and 3DCPZ. Violation of this zone targets 2057.25, then 2053.25 – 2051.00 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 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