The rout in Treasuries is picking up speed as inflationary fears spur forecasts for an abrupt shift towards aggressive monetary tightening. The 10-year yield climbed 9 basis points overnight to 2.09%, touching a level last seen in July 2019. That’s ahead of start of the FOMC’s March meeting tomorrow, where interest rates are expected to rise by 25 bps and Jay Powell will be drilled on the pace of the coming tightening cycle following the release of the latest “dot plot.”
Bigger picture: After Russia’s invasion of Ukraine in late February, traders poured into safe-haven assets like Treasuries, but that didn’t last long. Markets are now pricing in rate hikes at each of the Fed’s subsequent meetings for 2022, meaning another six increases this year.
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Prior Session was Cycle Day 3 (CD3): Once again end of week “risk-off” dominated the trading landscape for this Cycle Day. Though the Positive Cycle Statistic was fulfilled, the environment is clearly favoring distribution on any price bounce. Prior range was 138 handles on 942k contracts exchanged. NOTE: Volumes are split between March and June contracts as rollover is approximately 45% complete.
…Transition from Cycle Day 3 to Cycle Day 1
This leads us into Cycle Day 1 (CD1): Today begins a new cycle, with the Average Decline measuring 4180.. As such, estimated scenarios to consider for today’s trading.
Bull Scenario: Price sustains a bid above 4220, initially targets 4250 – 4265 zone.
Bear Scenario: Price sustains an offer below 4220, initially targets 4180 – 4170 zone.
*****3 Day Cycle has a 91% probability of fulfilling Positive Cycle Statistics covering 12 years of recorded tracking history.
PVA High Edge = 4274 PVA Low Edge = 4223 Prior POC = 4252
Range Projections and Key Levels (ES) June 2022 (M) Contract
Nasdaq 100 (NQ)
Today is Cycle Day 1 (CD1)…Average Decline for CD1 measures 13316, which is currently in-place. Prior range was 580 handles on 319k contracts exchanged. As such, there are two estimated scenarios to consider for today’s trading.
Bull Scenario: IF Bulls sustain a bid above 13277, THEN initial upside estimate targets 13352 – 13385 zone.
Bear Scenario: IF Bears sustain an offer below 13277, THEN initial downside estimate targets 13225– 13200 zone.
PVA High Edge = 13622 PVA Low Edge = 13396 Prior POC = 13438
Range Projections and Key Levels (NQ) June 2022 (M) 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
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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