Markets
Turn Around Tuesday or Dead Cat Bounce?
Stocks (^DJI, ^IXIC, ^GSPC) are eyeing a recovery after a three-day sell-off. But is it too early to declare today’s movement as a “Turnaround Tuesday”? Longview Economics founder, CEO, and chief market strategist Chris Watling joins Catalysts to discuss the market action and how investors can best position their portfolios amid volatility.
“Sell-offs tend to happen in waves. So it’s not just a straight line down, then we’re done. You know, they tend to be three waves or five waves. And in the middle of that, you get these relief rallies,” Watling explains. “So it’s perfectly natural that you have a very aggressive downside, a little bit of short covering, which creates a rally, which is probably what we’re in now.”
Source: Yahoo Finance
Economic Calendar
S&P 500
Prior Session was Cycle Day 2: MATD rhythms quickly turned positive as a “classic” short-squeeze / dead-cat bounce drove price higher to fulfill our 5330 target as outlined in DTS Briefing 8/6/24. Late day “drill-down” reversed the session long squeeze and left shortie and trapped longs whimpering. Range was 120 handles on 1.682M contracts exchanged.
…Transition from Cycle Day 2 to Cycle Day 3
This leads us into Cycle Day 3: Price has surpassed cycle targets and is currently above CD1 Low (5120), so we’ll mark this session as a “wild-card.” If the prior session was a DCB (dead-cat bounce), expectation would be for further downside to retest CD1 Low. Momentum clearly favors sellers as it is the current “risk-off” sentiment. Any bounce at this stage should be viewed as a selling opportunity.
You Know The Plan! Our discipline of maintaining positioning that is aligned with market forces continues to serve us well, so stay the course.
As such, scenarios to consider for today’s trading.
Bull Scenario: Price sustains a bid above 5240, initially targets 5275 – 5290 zone.
Bear Scenario: Price sustains an offer below 5230, initially targets 5205 – 5195 zone.
PVA High Edge = 5312 PVA Low Edge = 5255 Prior POC = 5270
PTG 3 Day Cycle
EXCLUSIVE OFFER
*****The 3 Day Cycle has a 90% probability of fulfilling Positive Cycle Statistics covering 12 years of recorded tracking history.
ES Chart
Nasdaq 100 (NQ)
Prior Session was Cycle Day 2: MATD rhythms quickly turned positive as a “classic” short-squeeze/ dead-cat bounce drove price higher to fulfill our 18445 target as outlined in DTS Briefing 8/6/24. Late day “drill-down” reversed the session long squeeze and left shortie and trapped longs whimpering. Range was 517 handles on 683k contracts exchanged.
…Transition from Cycle Day 2 to Cycle Day 3
This leads us into Cycle Day 3: Price has surpassed cycle targets and is currently above CD1 Low (17351), so we’ll mark this session as a “wild-card.” If prior session was a DCB (dead-cat bounce), expectation would be for further downside to retest CD1 Low. Momentum clearly favors sellers as it is current “risk-off” sentiment. Any bounce at this stage should be viewed as a selling opportunity.
You Know The Plan! Our discipline of maintaining positioning that is aligned with market forces continues to serve us well, so stay the course.
As such, scenarios to consider for today’s trading.
Bull Scenario: Price sustains a bid above 18100, initially targets 19256 – 19325 zone.
Bear Scenario: Price sustains an offer below 18100, initially targets 17965 – 17900 zone.
PVA High Edge = 19715 PVA Low Edge = 19045 Prior POC = 19285
NQ Chart
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.” –BR
*****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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