Trade Strategy 2.7.23

Markets

Landing strip

The jobs report threw a wrench into the accepted Fed path, reviving the debate over recession prospects and inflation stickiness. Opinion across Wall Street is divided. J.P. Morgan’s Marko Kolanovic argues that Goldilocks is all wet and an equity air pocket is coming, while ABP Invest sees just a 10% chance of a hard recession. Deutsche Bank’s chart shows why the jobless rate may not be a good predictor and Goldman sees a big equity haircut in the event of a hard landing.

Fed Chair Jerome Powell will speak at the Economic Club of Washington today for the first time since his FOMC decision-day presser. It’ll be interesting to hear the remarks, especially regarding how the central bank views Friday’s blockbuster jobs report and what that will mean for monetary policy going forward.

Source: SeekingAlpha.com

Economic Calendar

12:40 PM Jerome Powell Speech
1:00 PM Results of $40B, 3-Year Note Auction
2:00 PM Fed’s Barr Speech
3:00 PM Consumer Credit

https://www.investing.com/economic-calendar/

S&P 500

Prior Session was Cycle Day 2 (CD2): As written in prior DTS 2/6/23 briefing, this day unfolded as anticipated…Normal CD2 as price oscillated back n forth developing a neutral balanced day. Prior range was 39 handles on 1.513M contracts exchanged. 

 …Transition from Cycle Day 2 to Cycle Day 3

This leads us into Cycle Day 3 (CD3): Price is currently hovering near the Cycle Low (4132.50) in relative quiet overnight trade activity. All that is needed is for price to trade above this level during RTH session to secure a Positive Three-Day Cycle Statistic. We will mark today as a “wild-card” once the cycle stat is satisfied.  As such, estimated scenarios to consider for today’s trading.

Bull Scenario: Price sustains a bid above 4125, initially targets 4135 – 4140 zone. 

Bear Scenario: Price sustains an offer below 4125, initially targets 4110 – 4105 zone.

PVA High Edge = 4130       PVA Low Edge = 4118         Prior POC = 4124

Range Projections and Key Levels (ES) March 2023 (H) Contract

HOD  ATR Range Projection: 4177; LOD ATR Range Projection: 4071; 3 Day Central Pivot: 4150; 3 Day Cycle Target: 4175; 10 Day Average True Range  65; VIX: 19

Nasdaq 100 (NQ)

Today is Cycle Day 3 (CD3)…Price is currently hovering near the Cycle Low (12551) in relative quiet overnight trade activity. All that is needed is for price to trade above this level during RTH session to secure a Positive Three-Day Cycle Statistic. We will mark today as a “wild-card” once the cycle stat is satisfied.  As such, estimated scenarios to consider for today’s trading.

Bull Scenario: IF Bulls sustains bid above 12550, THEN initial upside estimate targets 12590– 12600 zone.

Bear Scenario: IF Bears sustains offer below 12550, THEN initial downside estimate targets 12480 – 12460 zone.

PVA High Edge = 12570       PVA Low Edge = 12502     Prior POC = 12550

Range Projections and Key Levels (NQ) March 2022 (H) Contract

HOD  ATR Range Projection: 12781; LOD ATR Range Projection: 122267; 3 Day Central Pivot: 12638; 3 Day Cycle Target: 12742; 10 Day Average True Range: 306; VIX: 19

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 SHOWN

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