The first Omicron case identified in the United States kicked selling into high gear on Wall Street yesterday. Stocks began the previous session sharply higher, but started to lose gains once Federal Reserve Chairman Jerome Powell reiterated that a faster Fed taper will be discussed at the next meeting.
8:30 Initial Jobless Claims
10:30 EIA Natural Gas Inventory
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Prior Session was Cycle Day 1 (CD1): Morning rally yet again lead to a sharp decline during afternoon session, accelerating into settlement. According to @SpotGamma, one-third of total SPX volume was expiring stock options, which exacerbated volatility. Market on Close Sell Imbalance of $3.7 billion added to the closing pressure. Range was 153 handles on 2.581M contracts exchanged.
…Transition from Cycle Day 1 to Cycle Day 2
This leads us into Cycle Day 2 (CD2): Price is attempting to stabilize during overnight trade activity, having bounced to 4550 but giving back two-thirds of that gain. Expectation is for continued elevated volatility with sharp moves in either direction. As stated many times in this publication, proper $risk management is crucial during these periods. Stay disciplined and always use stops. As such, estimated scenarios to consider for today’s trading.
1.) Price sustains a bid above 4507, initially targets 4535 – 4550 zone.
2.) Price sustains an offer below 4507, initially targets 4597 – 4483 zone.
*****The 3 Day Cycle has a 91% probability of fulfilling Positive Cycle Statistics covering 12 years of recorded tracking history.
PVA High Edge = 4643 PVA Low Edge = 4573 Prior POC = 4632
Range Projections and Key Levels (ES) December 2021 (Z) Contract
HOD ATR Range Projection: 4728; LOD ATR Range Projection: 4710; 3 Day Central Pivot: 4671; 3 Day Cycle Target: 4638; 10 Day Average True Range 31; VIX: 25
Nasdaq 100 (NQ)
Today is Cycle Day 2 (CD2)…Price is attempting to stabilize following prior session’s sharp decline. Prior range was 853 handles on 600k contracts exchanged, both metrics are twice the average. As such, there are two estimated scenarios to consider for today’s trading.
PVA High Edge = 16415 PVA Low Edge = 16178 Prior POC = 16366
Bull Scenario: IF Bulls sustain a bid above 15825, THEN initial upside estimate targets 15948 – 15982 zone.
Bear Scenario: IF Bears sustain an offer below 15825, THEN initial downside estimate targets 15780 – 15756 zone.
Range Projections and Key Levels (NQ) December 2021 (Z) Contract
HOD ATR Range Projection: 16143; LOD ATR Range Projection: 15651; 3 Day Central Pivot: 16196; 3 Day Cycle Target: 16122; 10 Day Average True Range: 342; 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!
“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 SHOWN