Residual Buying Momentum

Prices are higher in the overnight session as residual buying momentum has carried on through to 1959.50, which makes this current cycle a “Power Cycle” have risen approximately 60 handles from the correction lows.

Today begins a new cycle…The residual momentum from CD3 has the potential to hit 1962 handle, which is the cycle penetration target. Be on high alert for reversal developing today as Cycle Day 1 (CD1) which typically begins new probe for another secure low. One caveat for today is options expiration and summertime Friday…This weekend begins a big vacation period for many money managers before the end of summer activities, so volumes are anticipated to get much lighter.

Average Range on CD1 = 18.75; Max Range on CD1 –  22; Average Decline = 12.50 – 19.50; Odds of a Decline > 10 = 70%; Odds of a Decline > 20 = 41%

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

Today’ Hypotheses:

Scenario 1: Price is currently above the PDH (1954.00)..IF current bullish momentum continues the expected high target for CD1 is 1962.00…Price needs to hold above prior high for targets to be achieved.

Scenario 2: Price is very near to expansion targets between 1959 – 1962 expected high…Cycle Day 1 has a high probability of getting a decline of greater than 10 handles…As such, caution is warranted for any new longs…Failure to hold PDH on any pullback targets 1946 – 48 initially, THEN 1938 – 41 zone.

Trade Strategy: Price has extended beyond CD 3 high and has hit Xtreme cycle targets on residual momentum…Expectation today is for early strength to be sold into…As such, we will be cautious bulls and looking for evidence of more important sell response and price reversal from which to take short-side trades.

Remain Flexible…ALWAYS USE STOPS!

Good Trading…David

Habitude Nine
I will identify my mistakes and learn from them. I am optimistic, realistic and honest. I will not make up stories about the good or bad things that occurred in the past or are happening now. I admit when something is not working. My optimism gives me faith and courage. I will not fall prey to blame and fear.




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