Markets
Stock index futures point to another decline this morning following a tough past four sessions, with the market set to record its fourth down week out of the last five. The benchmark S&P 500 (SP500) is off 4% going into the last trading day of the week, while the Nasdaq (COMP.IND) and Dow (DJI) are down 4.6% and 3.7%, respectively. It’s also quadruple witching day, which refers to the simultaneous expiration of market index futures, stock futures, market index options and stock options. The event can lead to higher volatility, which is not the greatest recipe in the current environment.
****Catalyst: FedEx (FDX) sent shudders down traders’ spines late Thursday after sounding the alarm on macro weakness and withdrawing its full-year guidance.
Economic Calendar
10:00 Consumer Sentiment
1:00 PM Baker-Hughes Rig Count
https://www.investing.com/economic-calendar/
***New: PTG Trading Room Chat Log’s Link
S&P 500
Prior Session was Cycle Day 1 (CD1): Normal CD1 unfolded as price traded with a heavy sell bias, tagging the Average Decline (3910) heading into the closing rotation. Range was 72.50 handles, on 2.302M contracts exchanged.
…Transition from Cycle Day 1 to Cycle Day 2
This leads us into Cycle Day 2 (CD2): Price is trading lower during overnight activity following FedEx’s negative forward guidance, which is a macro economic barometer. Lower CD2 Violation Zone (3888 – 3878) has been fulfilled. It’s QUAD Witch OPEX today, so expectation is for heavy two-way influence centered near the 3900 Strike Zone. As such, estimated scenarios to consider for today’s trading.
Bull Scenario: Price sustains a bid above 3905, initially targets 3920 – 3925 zone.
Bear Scenario: Price sustains an offer below 3905, initially targets 3885 – 3880 zone.
*****3 Day Cycle has a 91% probability of fulfilling Positive Cycle Statistics covering 12 years of recorded tracking history.
PVA High Edge = 3952 PVA Low Edge = 3909 Prior POC = 3935
Range Projections and Key Levels (ES) December 2022 (Z) Contract
HOD ATR Range Projection: 3970; LOD ATR Range Projection: 3813; 3 Day Central Pivot: 3972; 3 Day Cycle Target: 3910; 10 Day Average True Range; 92; VIX: 27
Nasdaq 100 (NQ)
Today is Cycle Day 2 (CD2)…Price is trading lower during overnight activity, fulfilling CD2 Violation Zone (11887 – 11850). We’ll be looking for increased 2-way traffic during today’s session as QUAD Witch OPEX will have the main influence. Prior range was 331 handles on 712k contracts exchanged. As such, there are two estimated scenarios to consider for today’s trading.
Bull Scenario: IF Bulls sustain a bid above 11940, THEN initial upside estimate targets 12000 – 12025 zone.
Bear Scenario: IF Bears sustain an offer below 11940, THEN initial downside estimate targets 11887– 11850 zone.
PVA High Edge = 12133 PVA Low Edge = 11951 Prior POC = 12016
Range Projections and Key Levels (NQ) December 2022 (Z) Contract
HOD ATR Range Projection: 12206; LOD ATR Range Projection: 11600; 3 Day Central Pivot: 12218; 3 Day Cycle Target: 12042; 10 Day Average True Range: 356; VIX: 27
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.”
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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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