Trading Range

S&P e-mini futures have settled into a multi-day trading range (Balance Zone) between 1988 – 2008 (20 handles). The Point of Control Zone is 1996 – 2000. We commented in yesterday’s DTS the increasingly wider daily ranges resulting in differing viewpoints of accepted value between traders/investors. This makes for excellent intra-day trading opportunities for the flexible and nimble trader.

Today is Cycle Day 3 (CD3)…Initial cycle price targets have already been achieved (2007), so with price currently hovering around multi-day POC, it’s going to take a fair amount of renewed energy in either direction for range expansion. Probabilities favor more testing of upper and lower boundaries (range trade) to determine the path of least resistance.

Odds of 3D Rally >10 = 82%; Odds of 3D Rally > 20 = 53%; Average Range on CD3 = 17.75; Max Range on CD3 = 21.25. Potential High Zone on CD3 = 2011 – 2014.

***Note: The odds highlighted are NOT predictions, rather a guide based upon historical observed occurrences.

Today’s Hypotheses:

Scenario 1: Prior Day High (2006.75)…IF price can penetrate and convert, THEN there is a 54% chance of reaching 2008.75 – 2010.25 zone, followed by Cycle Expansion Target Zone 2011 – 2014.

Scenario 2: Prior Day Low (1994.00)…IF price violates and converts this level, THEN lower price targets range between 1992.50 down to CD1 low at 1988.25. Any violation of CD1 low (1988.25) ushers in long liquidation targeting 1986 – 1983.50 zone with Xtreme 1980 level.

Trade Strategy: Given the multi-day range pattern, probabilities favor price range containment. As such, our tactical trade strategy will mainly be buying dips and selling rips from key Decision Point Pivots (DPP’s) at price edges. As always, we remain acutely aligned with dominant force at play throughout the session. Remain Flexible and Focused!

Focus on Trading Process…Take the Trade…ALWAYS USE STOPS!

Good Trading…David


Habitude Twelve
I am disciplined. I behave in a way to reach my goals. I do what I intend to do. I have the intent to win through right actions. I will be patient for patterns to emerge and mature. I am decisive. I decide easily and act promptly. I act in the right way and right on time. When there is nothing to be done, I will wait.


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