Markets (Top Stories)
The recent bond selloff is threatening hopes for a soft landing for the U.S. economy, as traders prepare for borrowing costs to remain higher for longer, while fears over the widening federal deficit continue to mount. Bonds that mature in 10 years or more have slumped 46% since peaking in March 2020, slightly below the 49% plunge seen in U.S. stocks after the dot-com bust.
Bigger picture: “The magnitude of the bond selloff has been so stunning that stocks are arguably more expensive than a month ago,” said Barclays. “In the short term, we can think of one scenario where bonds rally materially – if risk assets fall sharply in the coming weeks.” It noted that the Federal Reserve may not ease up on quantitative tightening and will remain a net seller of Treasurys, while the increase in bond supply due to rising deficit is also driving up the term premium.
Prior Session was Cycle Day 2 (CD2): Price fulfilled both our lower (4235) and upper (4300) objectives outlined in prior DTS 10.04.23 Briefing. Although price was able to traverse the 5-day value zone and trade near the upper edge, the multi-day balancing condition remains unchanged. Prior range was 68 handles on 2.096M contracts exchanged.
…Transition from Cycle Day 2 to Cycle Day 3
This leads us into Cycle Day 3 (CD3): Three-Day Cycle core target objective have been satisfied, though additional upside potential exists to 4310 handle. Bulls closed out prior sessions’ trading with overall ball-control, though price remains within multi-day balancing value zone. This market is still a “jump-ball” for directional dominance, so core trade plan remains unaltered…Stay aligned with dominant intra-day direction and be flexible to adjust positioning as needed. Bulls will have to score a “follow-through” session today, otherwise “fade-to-black.” As such, scenarios to consider for today’s trading.
Bull Scenario: Price sustains a bid above 4290, initially targets 4305 – 4315 zone.
Bear Scenario: Price sustains an offer below 4290, initially targets 4275 – 4270 zone.
PVA High Edge = 4285 PVA Low Edge = 4257 Prior POC = 4275
Range Projections and Key Levels (ES) December 2023 (Z) Contract
Nasdaq 100 (NQ)
Prior Session was Cycle Day 2 (CD2): Although price notched a strong intra-day directional rally and fulfilled primary Three Day Cycle objective, the multi-day balancing condition remains unchanged. Prior range was 367 handles on 794k contracts exchanged.
…Transition from Cycle Day 2 to Cycle Day 3
This leads us into Cycle Day 3 (CD3): Three-Day Cycle core target objective have been satisfied, though additional upside potential exists to 14954 handle. This market is still a “jump-ball” for directional dominance, so core trade plan remains unaltered…Stay aligned with dominant intra-day direction and be flexible to adjust positioning as needed. Bulls will have to score a “follow-through” session today, otherwise “fade-to-black.” As such, scenarios to consider for today’s trading.
Bull Scenario: Price sustains a bid above 14915, initially targets 15000 – 15050 zone.
Bear Scenario: Price sustains an offer below 14915, initially targets 14825 – 14805 zone.
PVA High Edge = 14890 PVA Low Edge = 14742 Prior POC = 14839
Range Projections and Key Levels (NQ) December 2023 (Z) Contract
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!
“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
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