Markets
Wall Street is continuing its unprecedented roller-coaster ride amid the coronavirus turmoil, with stock index futures plunging about 4% overnight to enter “limit down” territory once again. In fact, the S&P 500 has swung 4% or more in either direction for the last seven consecutive sessions, topping the previous record of six days from November 1929.
Source: Seeking Alpha https://seekingalpha.com/
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S&P 500
Price across indexes are locked LIMIT DOWN yet again as markets are bracing for sharp decline for RTH Open.
Prior Session was Cycle Day 2 (CD2)…We wrote in prior Daily Trade Strategy Briefing: “Typical CD2 “normal” would be for market to seek some stabilization and balance. Key to watch is for CD1 Low (2350) to continue to hold on any retest. Failure would open door for further declines, while conversion above 2445 opens door to a “Turn-Around Tuesday” Rally.”
Price did in-fact successfully test the prior CD1 Low (2350), at which time the rally did unfold but stalled at 2545 at expected initial resistance within the 3 Day Central Pivot Zone. All-In-All textbook Cycle Day 2.
This leads us into today’s Cycle Day 3 (CD3)…We are going to mark today as a “wild card” day, since price is building 2-Day Balance Zone within VAH > 2520…VAL > 2430…POC > 2485. IF price violates and converts 2380, THEN further downside measures 2350 – 2330 zone. IF price can recover above 2445, THEN upside targets 2500 – 2520 zone. With VIX 75, we expect that “Everything Can Happen, So Nothing is Surprising” Honor Thy Stops!
We’ll keep the “HIGH SURF WARNING FLAG” posted as volatility remains elevated, with VIX 75 and ATR (3) 236 handles.
****IMPORTANT >>> IF preset $risk parameters have been exceeded in your individual trade plan, THEN simply stand-aside or trade in simulation-mode until trade risk can properly be managed.
Please review the NYSE Circuit Breaker Rules in the section below.
Stock index futures in the U.S. plunged the 5% limit overnight, triggering limit-down rules, meaning only transactions at or above that threshold are allowed. Once the market opens, NYSE circuit breakers will work like this: trading halts for 15 minutes if the S&P 500 falls 7% at any time before 3:25 p.m. ET. Another 15-minute pause is triggered if losses reaches 13%. If the decline hits 20%, markets will close for the day
PVA High Edge = 2520 PVA Low Edge = 2430 Prior POC = 2485
Bull Scenario: IF Bulls hold bid above 2380, THEN initial upside estimate targets 2445 – 2465 zone.
Bear Scenario: IF Bears hold offer below 2380, THEN initial downside estimate targets 2350 – 2330 zone.
Range Projections and Key Levels (ES) June 2020 (M) Contract
HOD ATR Range Projection: 2668.00; LOD ATR Range Projection: 2212.00; 3 Day Central Pivot: 2504.00; 3 Day Cycle Target: 2560.00; 3 Day Average True Range 236; VIX: 75
Nasdaq 100 (NQ)
Today is Cycle Day 3 (CD3)…Price bracing for limit-down open…
PVA High Edge = 7470 PVA Low Edge = 7200 Prior POC = 7375
Bull Scenario: IF Bulls hold bid above 7064, THEN initial upside estimate targets 7270 – 7412 zone.
Bear Scenario: IF Bears hold offer below 7064, THEN initial downside estimate targets 6926 – 6866 zone.
Range Projections and Key Levels (NQ) June 2020 (M) Contract
HOD ATR Range Projection: 7838.00; LOD ATR Range Projection: 6605; 3 Day Central Pivot: 7400.00; 3 Day Cycle Target: 7600; 3 Day Average True Range: 722; VIX: 75
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