Market movement: Going into today’s session, the Nasdaq Composite is down 3.3% for the week, the S&P 500 is 3% lower and the Dow is off 2.4%. Things don’t look any better in the pre-market session, with futures tied to the major averages sliding another 1%, while bonds continue to be hit by a brutal selloff. The 10-year Treasury yield is up 7 basis points to 3.78%, on a pace for its biggest weekly rise since April, while the 2-year yield (US2Y) is up 6 basis points to 4.19%, having breached 4.20% earlier.
Resetting expectations: “The forward paths of inflation, economic growth, interest rates, earnings, and valuations are all in flux more than usual with a wider distribution of potential outcomes,” wrote Goldman Sachs strategist David Kostin. On that note, the bank slashed its year-end target for the S&P 500 to 3,600 from 4,300, and said the benchmark could even fall to as low as 3,150 in the event of a serious recession.
9:45 PMI Composite Flash
1:00 PM Baker Hughes Rig Count
2:00 PM Jerome Powell Speech
2:05 PM Fed’s Brainard and Bowman Speech
***New: PTG Trading Room Chat Log’s Link
Prior Session was Cycle Day 3 (CD3): Choppy volatile session unfolded, which made for one of the most challenging trading rhythms is recent memory. Failed 3-day Cycle as bulls could not stage a sustained recovery. Prior range was 69 handles on 2.535M contracts exchanged.
…Transition from Cycle Day 3 to Cycle Day 1
This leads us into Cycle Day 1 (CD1): Average Decline for CD1 measures 3763, which has been surpassed during overnight trade activity. RISK-OFF continues to be the main theme with nowhere to hide for the longs. Downward revisions of year-end S&P targets are yet to be fully factored in. Bottom Line: It is going to be a rough ride this Fall, which officially began yesterday. Good way to usher in this season. As such, estimated scenarios to consider for today’s trading.
Bull Scenario: Price sustains a bid above 3750, initially targets 3775 – 3780 zone.
Bear Scenario: Price sustains an offer below 3750, initially targets 3720 – 3715 zone.
PVA High Edge = 3790 PVA Low Edge = 3768 Prior POC = 3780
Range Projections and Key Levels (ES) December 2022 (Z) Contract
HOD ATR Range Projection: 3809; LOD ATR Range Projection: 3691; 3 Day Central Pivot: 3838; 3 Day Cycle Target: 3810; 10 Day Average True Range 92; VIX: 29
Nasdaq 100 (NQ)
Today is Cycle Day 1 (CD1)…Average Decline for CD1 measures 11516. Prior range was 286 handles on 780k contracts exchanged. As such, there are two estimated scenarios to consider for today’s trading.
Bull Scenario: IF Bulls sustains bid above 11450, THEN initial upside estimate targets 11500– 11525 zone.
Bear Scenario: IF Bears sustains offer below 11450, THEN initial downside estimate targets 11380 – 11360 zone.
PVA High Edge = 11635 PVA Low Edge = 11540 Prior POC = 11592
Range Projections and Key Levels (NQ) December 2022 (Z) Contract
HOD ATR Range Projection: 11725; LOD ATR Range Projection: 11254; 3 Day Central Pivot: 11763; 3 Day Cycle Target: 11782; 10 Day Average True Range: 345; VIX: 29
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