Markets
Longer rates are heading even higher this morning, with the 10-year Treasury yield up 6 basis points to 4.29% in early trading. It follows a major milestone in the previous session, when the 10-year closed at its highest level since 2008, following a drop in jobless claims and more hawkish Fed chatter. In fact, Treasury prices are now on their longest decline since 1984, when inflation slayer Paul Volcker was at the helm of central bank and carrying out rapid rate hikes.
Stock washout? Higher yields put sharp pressure on growth stock valuations, though there was a recent flash of equity resilience early this week, or what some strategists are calling a bear-market rally. The S&P 500 has successfully challenged its 200-week moving average and 50% retracement levels around 3,600-3,500, but round numbers do tend to matter to the market and megacaps, with their outsize influenced susceptible to rising rates.
Economic Calendar
1:00 PM Baker-Hughes Rig Count
***New: PTG Trading Room Chat Log’s Link
S&P 500
Prior Session was Cycle Day 2 (CD2): Another wide range session as price tested the upper and lower edges of our pre-set parameters. In the end, it was a “normal” Cycle Day 2, albeit with fairly wide swings. Range was 81.75 handles on 2.342M contracts exchanged.
…Transition from Cycle Day 2 to Cycle Day 3
This leads us into Cycle Day 3 (CD3): Price is currently below CD1 Low (3676.75) as odds are favorable for this level to be recovered during the RTH to secure a Positive 3-Day Cycle Statistic. The big event today is Options Expiration (OPEX) which should provide further volatile price action. As such, estimated scenarios to consider for today’s trading.
Bull Scenario: Price sustains bid above 3652, initially targets 3675 – 3690 zone.
Bear Scenario: Price sustains offer below 3652, initially targets 3635 – 3625 zone.
PVA High Edge = 3715 PVA Low Edge = 3668 Prior POC = 3677
Range Projections and Key Levels (ES) December 2022 (Z) Contract
HOD ATR Range Projection: 3743; LOD ATR Range Projection: 3583; 3 Day Central Pivot: 3720; 3 Day Cycle Target: 3676; 10 Day Average True Range 104; VIX: 30
Nasdaq 100 (NQ)
Today is Cycle Day 3 (CD3)…Price is currently trading below CD1 Low (11049) as odds favor recovering this level during RTH. OPEX is the main theme for today’s action, with expectation of continued volatile price swings. As such, estimated scenarios to consider for today’s trading.
Bull Scenario: IF Bulls sustains bid above 11008, THEN initial upside estimate targets 11060 – 11087 zone.
Bear Scenario: IF Bears sustains offer below 11008, THEN initial downside estimate targets 11070 – 11055 zone.
PVA High Edge = 11200 PVA Low Edge = 11043 Prior POC = 11089
Range Projections and Key Levels (NQ) December 2022 (Z) Contract
HOD ATR Range Projection: 11324; LOD ATR Range Projection: 10729; 3 Day Central Pivot: 11202; 3 Day Cycle Target: 11049; 10 Day Average True Range: 385; VIX: 30
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.” –Bruce Lee
*****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.”
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS
IMPORTANT NOTICE! No representation is being made that the use of this strategy or any system or trading methodology will generate profits. Past performance is not necessarily indicative of future results. There is substantial risk of loss associated with trading securities and options on equities. Only risk capital should be used to trade. Trading securities is not suitable for everyone.
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CFTC RULE 4.41 –HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN6.22.22