Contract Rollover (Dec. Z)

Good Morning Traders:

First, today is September 11th and the anniversary of the 911 Twin Towers Attack. Please take a moment to say a prayer for those dearly departed and their families.


Second, today is Futures Contract Rollover for Indexes…Front Month is December (Z), so please adjust charts accordingly. We will continue to trade Sept (U) today in trading room and begin to switch either Friday afternoon or Monday depending upon contract volume. The December contract is trading at minus 8 handles to September contract.

Third, today’s DTS Briefing Report will be based upon the September (U) Contract.


Yesterday was Cycle day 1 (CD1)…Price traded down as expected seeking a “secure low” from which to begin this cycle’s auction rally. The Low of Day (1981.50) hit within projected possible low zone. Price subsequently began it’s rally pushing up and closing at high of session…Settlement price reached approximately 75% of 3D Cycle Average rally of 17 handles.

Today is Cycle Day 2 (CD2)…Price has already achieved 75% of Cycle Average Rally, so today’s trade expectation is for some “back n fill” consolidation to absorb recent activity. Also, contract rollover tends to have a dampening effect on price action since trade activity will now be focused on “spread-roll” between months.

Possible High Zone on CD2 = 1996.75 – 2000.50; Possible Low Zone on CD2 = 1968.75 – 1970.50; Odds of Rally > 10 = 83%; Odds of Rally > 20 = 44%; Average Rally = 15.25 – 17; Average Range = 14.50; Max Range = 22.25.

Today’s Hypotheses:

Scenario 1: Price has pulled back approximately 62% from close in pre-pit session trade…Expectation is for “back n fill” trade today…IF price can hold firm above Prior Day Low (1981.50), and find responsive buyers, THEN price has 65% chance to auction back up to test Prior Day High (1996.25). The 3DCPZ has adjusted downward to 1994.25 – 1994.75 zone, which should become initial resistance. IF price can convert PDH, THEN probabilities favor reaching 1998.25 – 2000.50 zone.

Scenario 2: Failure to hold Prior Day Low (1981.50) on pullback test, suggests resurgence of Sellers dominance, and forces additional long liquidation. Downside price targets are layered between 1979.50…1977.50 – 1975.75 zone, with Xtremes measuring 1972 – 170 zone.

Trade Strategy: With contract rollover possibly creating some choppiness, we will remain flexible and look for two-sided trade from key Decision Point Pivots (DPP’s). Buying dips near prior support…Selling bounces to prior resistance…Relative neutral trade near middle of range. Since price is currently trading below the Three-Day Central Pivot Zone, price structure has begun to weaken and rallies are now being sold more aggressively by larger institutional traders.

Remain Flexible…Follow the Rules…ALWAYS USE STOPS!

Good Trading…David

Habitude Two
I am detached from the results. I think in terms of the process and the validity of the process. I understand that I am more than the trading. I do not tie a fragile ego to any day’s trading results. I have faith that over time I will make money. The results of any one trade are statistically unimportant. I think in term of probability. A single trade says nothing about me as a person.



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