Back n Fill

S&P e-mini failed to push higher and violated the 1998 “key marker” we laid out in yesterday’s report. Having violated this level sets the 2002 handle as a short-term high. Price will need to get back above 1998 handle to reestablish the upside momentum.

Overnight price has moved lower to “key support zone” between 1986 – 88, following reports that Russian backed rebels have officially “invaded” Ukraine, further increasing tensions in that region.

Today is Cycle Day 1 (CD1) which begins a new cycle to probe for solid support. The 20-Day Average Decline on CD1 = 13.25…Maximum observed decline on CD1 = 21.25; Odds of Decline > 10 – 70%; Odds of Decline > 20 = 40%; Average Range = 18.75; Max Range = 21.75.

***Note: The odds highlighted are not predictions, rather a guide based upon historical observed occurrences.

Today’s Hypotheses:

Scenario 1: Price is currently well off the Prior Day High (2000.50)…IF this level is ultimately converted, THEN price targets between 2004.50 – 2008.25. The 1998 level is “key marker” which is also the 3DCPZ zone. This should act as resistance until proven otherwise…Any price bounce to this zone is anticipated to illicit a sell response, and as such, is a shortable zone.

Scenario 2: Price has pulled back to “key support zone” between 1886 – 88…which is equal to the Average Decline on Cycle Day 1 (CD1). IF this zone can illicit a strong buy response, THEN odds favor a bounce back to 1996 – 98 3DCPZ. Failure to find responsive buyers in sufficient quantity suggests further lower probing to find a secure low from which to stage this cycle’s up auction. Lower levels to be mindful of are 1982.75, with Xtremes down to 1979.25.

Trade Strategy: We are not going to give up on the Bullish case just yet, so we’ll be looking to enter longs from lower zones IF price can stabilize and selling dries up. We’ll also consider short-side now given upper key marker has been violated…So bounces that fail to carry higher we’ll look to fade for push lower. As traders we remain flexible to trade both sides withn key price edges.

Follow the Rules…Focus on the Trading Process…ALWAYS USE STOPS!

Good Trading…David

Habitude Six
I am at peace with uncertainty. I know there is no such thing as a sure thing. I have no particular need to be right. I understand that being perfect has no place in trading. I am flexible. I am willing to change my mind. I am alert to scenario changes. I accept the information that tells me I am on the right track or on the wrong track.


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