The Federal Reserve kicked off its tightening cycle with an expected quarter-point hike and the stock and bond markets had different reactions. The FOMC hiked rates by a quarter-point. That was expected, but the summary of economic projections took what many saw as a hawkish tilt, with the median forecast for rates to end 2022 at 1.9%, up from 0.9% in December, and the majority of Fed officials looking for seven hikes this year. Officials see rates at 2.8% at the end of 2023, up from 1.6% at the previous Fed meeting.
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Prior Session was Cycle Day 3 (CD3): Positive reaction to the FED’s Presser and their steadfastness to combat inflationary pressures. Market’s were very well hedged for possible downside surprise and when that did not develop, the unwinding created an aggressive bid driving prices sharply higher. We would still view this movement as reduction in hedges heading into OPEX and NOT a new bullish sentiment shift. Prior range was 128 handles on 1.669M contracts exchanged.
…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 4255. OPEX takes center stage as QUAD Witching (Quarter-Ending) is on tap for tomorrow. Volatility is expected to remain elevated for the foreseeable future, which could be measured in minutes, days or weeks depending on your trading time horizon. #KNOWYOURMIL As such, estimated scenarios to consider for today’s trading.
Bull Scenario: Price sustains a bid above 4360, initially targets 4385 – 4398 zone.
Bear Scenario: Price sustains an offer below 4360, initially targets 4320 – 4315 zone.
*****3 Day Cycle has a 91% probability of fulfilling Positive Cycle Statistics covering 12 years of recorded tracking history.
PVA High Edge = 4337 PVA Low Edge = 4292 Prior POC = 4324
Range Projections and Key Levels (ES) June 2022 (M) Contract
Nasdaq 100 (NQ)
Today is Cycle Day 1 (CD1)…Average Decline for CD1 measures 13483 for this cycle day. Prior range was 608 handles on 606k contracts exchanged. As such, there are two estimated scenarios to consider for today’s trading.
Bull Scenario: IF Bulls sustain a bid above 13945, THEN initial upside estimate targets 14020 – 14025 zone.
Bear Scenario: IF Bears sustain an offer below 13945, THEN initial downside estimate targets 13900– 13845 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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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