This recent swing in the S&P has pushed up price 90 handles off the corrective low in what we have described as a “Power Cycle”. This cycle has the energy to test recent high and perhaps notch new contract highs. With summer slowdown upon us and below average volumes it won’t take much to push new highs, so we remain disciplined to not fade the price action and go with the flow.

Today begins a new three-day cycle. Typically on Cycle Day 1 (CD1) we would anticipate a decline in price to probe for a new higher “secure low” from which to stage the next up auction sequence. The current “power cycle” has good momentum energy, and as such, any pullback in price may be relatively shallow compared to prior CD1 probes.

Average Range on CD1 = 18.75; Max Range on CD1 = 22.00; Odds of a Decline > 10 = 70%; Odds of a decline > 20 = 40% Average Decline on CD1 = 13.00 which projects 1965.25 pullback target.

Today’s Hypotheses:

Scenario 1: IF price can convert Prior Day High 1978.25, THEN there is a 55% chance of achieving 1981.00 – 1982.25 STATX Zone, followed by 1986 handle prior contract high. Initial pullback support is 1973 – 74 PDVTMP zone. Price will need to hold above this level and convert PDH to increase probabilities of achieving upper price targets.

Scenario 2: Failure to convert PDH (1978.25) and subsequent violation of 1973 – 74 zone suggests an auction failure and potential for deeper probe to find responsive buyers. There are several layers of potential support below, as this current cycle is a strong power cycle.

Trade Strategy: Though today begins a new cycle, expectation is for any pullback to be relatively shallow with bulls continuing to dominate trade. With multiple layers of structural support below, tactical trade remains buying pullbacks to key Decision Points (DP’s). As always, we remain flexible to trade opportunities on both sides but remain in alignment with dominate force, which is currently the Bull.

Follow the Trade Rules…Take the Trade…ALWAYS USE STOPS!

Good Trading…David

Habitude Twelve
I am disciplined. I behave in a way to reach my goals. I do what I intend to do. I have the intent to win through right actions. I will be patient for patterns to emerge and mature. I am decisive. I decide easily and act promptly. I act in the right way and right on time. When there is nothing to be done, I will wait.

 

PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS