Trade Strategy 12.22.14

As Mrs Claus (Fed Chair Yellen) gave the Markets an early Christmas Present last week, prices continue to hold firm at all-time highs. Barring any external “event”, our expectation is for continued firmness throughout the holiday season capping the year off with the annual Santa Claus Rally between Christmas and New Years.

Trading volume will begin to become lighter each day, so bear that in mind when selecting trade opportunities…It might be better worth your time to enjoy holiday festivities.

Today is Cycle Day 2 (CD2)…Friday produced a shallow decline, which was expected, given the strength in recent upside move…Odds of Rally > 10 = 83%; Odds of Rally > 20 = 45%; Average Range on CD2 = 14.50; Max Average Range = 22.50; Possible High = 2087.50; Possible Low = 2036.75.

***Note: The odds highlighted are NOT predictions or trade recommendations, rather a guide based upon historical observed occurrences.

Today’s Hypotheses:

Scenario 1: IF price clears and converts PDH (2076.25), THEN there is a 50% chance price extends to reach projected target 2087.50. Above this level projects 2097.50 – 2100.

Scenario 2: IF price violates PDL (2056.50), THEN odds favor a 45% chance of retracing to meet downside range objective 2036.75.

*****To reiterate, trade expectation is for “quiet firmness” with an upside bias during holiday season…It’s critically important to be strict and disciplined on trade selection…This is not the time to become a bold trader…Plenty of time for that in 2015…For now, be in the holiday spirit and enjoy.

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 of 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

Habitude Seven
I take the long term view. I am willing to lose in the short term. I understand that losses are a necessary cost of doing business, like inventory to a merchant. Drawdowns are viewed as temporary. I realize that my wins and winning periods are part of the broad process. Each trade is but one in a string of trades. What is happening now is one piece of a much larger puzzle. Because of this I do not get overly euphoric or despondent.

Leave a Reply