Mutant strain dents stimulus optimism
Traders are nervously watching a new COVID-19 mutation in the U.K., which has resulted in a tough lockdown in London and southeast England, and led a number of countries to block travel from Britain. The mutant variant, dubbed B117, could be up to 70% more transmissible than COVID-19.
The House is expected to vote on the bill today, followed by the Senate, and while that was supposed to be a catalyst for the market’s next move higher, U.S. stock futures are going in the other direction. Dow -2%; S&P 500 -2.2%; Nasdaq -1.5%.
8:30 Chicago Fed National Activity Index
1:00 PM Results of $17B, 20-Year Bond Auction
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Oil sentiment goes into reverse
Just when things were starting to look better for black gold, with WTI transitioning to $50/bbl resistance, a series of announcements over the weekend showed crude investors that they’re not out of the woods just yet. “The oil market has been on a bull trend in the past month or so, ignoring negative factors, amid an optimism that a widening vaccine rollout would revive global growth, but investors’ rosy expectations for 2021 have suddenly vanished due to a new variant of the virus,” said Kazuhiko Saito, chief analyst at commodities broker Fujitomi. Also weighing on the sector… Royal Dutch Shell (RDS.A, RDS.B) said it would write down the value of oil and gas assets by $3.5B-$4.5B, bringing total impairments for the oil major this year to nearly $20B. Crude futures -5.3% to $46.61/bbl.
Prior Session was Cycle Day 1 (CD1): Price action was reminiscent of CD2 as price balanced throughout the session as Quadruple Options Expiry was the main driver. Range was 45.75 handles on 1.479M contracts exchanged.
…Transition from Cycle Day 1 to Cycle Day 2
This leads us into Cycle Day 2 (CD2): Price declined during overnight trade blowing past the CD1 Low (3677.25), testing the low pivot zone (3595 — 3600). Price has recovered about one-third of the decline in pre-RTH trade. As such, there are two estimated scenarios to consider for today’s trading.
1.) Price sustains a bid above 3640, initially targets 3665 – 3685 zone.
2.) Price sustains an offer below 3640, initially targets 3620 – 3600 zone.
*****3 Day Cycle has a 91% probability of fulfilling Positive Statistic covering 12 years of recorded tracking history.
PVA High Edge = 3705 PVA Low Edge = 3680 Prior POC = 3694
Range Projections and Key Levels (ES) March 2021 (H) Contract
HOD ATR Range Projection: 3632; LOD ATR Range Projection: 3687; 3 Day Central Pivot: 3700; 3 Day Cycle Target: 3752; 10 Day Average True Range 36; VIX: 28
Nasdaq 100 (NQ)
Today is Cycle Day 2 (CD2)…Price is currently trading below CD1 Low (12610) and has tested and reversed from CD1 Violation Level (12500) during overnight trade. As such, there are two estimated scenarios to consider for today’s trading.
PVA High Edge = 12433 PVA Low Edge = 12330 Prior POC = 12395
Bull Scenario: IF Bulls sustain a bid above 12570, THEN initial upside estimate targets 12610 – 12650 zone.
Bear Scenario: IF Bears sustain an offer below 12570, THEN initial downside estimate targets 12530 – 12500 zone.
Range Projections and Key Levels (NQ) March 2021 (H) Contract
HOD ATR Range Projection: 12632; LOD ATR Range Projection: 12614; 3 Day Central Pivot: 12694; 3 Day Cycle Target: 12909; 10 Day Average True Range: 168; VIX: 28
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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