NATURAL GAS

Today's MARKET STATE for NATURAL GAS: **BULL TREND**

- The MKT has a firm tone and as long as the integrity of the previous session low remains intact, look for excuses to get long. On the SELL side UP FADE strategies are valid but profit targets and risk management should be tight.  REVERSAL strategies should be applied only at the UP and +c after an exhaustive signal. Use DP BREAKOUT strategies as a signal to FADE a positive reaction against the DIR. Only until the MKT breaks the positive structure are sell signals an opportunity.

- On the BUY side BREAKOUT, FADE and REVERSAL are recommended as the MKT is bid and all buy signals are valid opportunity. If stopped out at or near the low tic of a reaction and the MKT is not following through to the downside, look to re-enter using the recent squeeze low as a stop. If the MKT breaks structure, de-leverage and be more selective as the likelihood of a sideways trade is high.

Today's PRICE MAP Performance for NG

Wrap Up
- NATURAL GAS has produced a positive signal with a MC value of +7 and the R Level at the minor level below the DT1.  This setup has extremely bullish implications and traders should be looking to BUY at all major inflection points above the R.  Although we weren't given a substantial rally, the opportunity for profits was still presented to us during the trading day.  Just after 7 A.M. a BUY DIR FADE strategy could have been executed.  The trade held structure, making higher lows and higher highs throughout the advance, and ultimately achieved the UP around 10:30 A.M. 

10YR T-NOTES

Today's MARKET STATE for 10YR T-NOTES: **NEUTRAL NEGATIVE SHIFT**

-Technically the MKT has produced a big negative signal against a positive trend.  On the SELL side avoid UP and DIR FADE strategies until after the previous session low point or major support level has been broken to confirm a negative shift.  UP REVERSAL strategies should be avoided as any positive signal is more likely an indication that the underlying trend is going to resume.  DP SELL BREAKOUT strategies can be profitable but they are aggressive and should look to take profits and potentially REVERSE long at support targets.

- On the BUY side accept BREAKOUT, FADE and REVERSAL strategies off major inflection points with the expectation that the positive momentum is going to resume.  UP BREAKOUT strategies can risk a little more if current events confirm positive posture.  If not, a better approach would be to FADE a negative “squeeze” reaction after a positive breakout signal at the DIR as the neutral technical position can keep the trend sideways.

Today's PRICE MAP Performance for TY

Wrap Up
- Today the 10YR T-NOTES performed to market expectations.  The market produced a negative signal with a MC Value of -2 in an underlying POSITIVE trend.  The R Level at the DIR defines the level above which traders should be looking for the positive trend to resume.  The market respected the R Level just before 3 A.M. and rallied up to the minor level within the Critical Range.  The market then gave us the negative "squeeze" that our Market State told us to look for and gave the trader a perfect opportunity to execute a BUY DIR FADE strategy at the R Level around 6 A.M.  From here, price action continued higher, crossing the UP, and almost achieving the UT1.

MINI NASDAQ 100

Today's MARKET STATE for MINI NASDAQ 100: **NEUTRAL DIGESTION TRANSITION**

- The MKT has produced a positive signal but has yet to confirm the signal and remains in neutral. On the SELL side REVERSAL strategies can be executed at the UP or near the previous session high point. Avoid this strategy on higher levels as any new strength has the potential to be the beginning of a move. If the integrity of the previous session high remains intact, UP FADE strategies can be accepted. Use a BREAKOUT strategy as a signal for a DIR FADE. Only take this trade if the previous session high point remains intact.

- On the BUY side be more aggressive after the previous session high has been taken out.  UP BREAKOUT strategies should just "go", so keep risk parameters tight. FADE into any negative reaction off an unsuccessful upside BREAKOUT against the DIR. DP FADE strategies are recommended early in the session or near the end.

Today's PRICE MAP Performance for ND

Wrap Up
-Today's Market State for the MINI NASDAQ 100 is a very unique one.  This Market State is used when the signature state is NEUTRAL; however, there is a higher probability for today to be the beginning of a new move.  Since the market had produced a POSITIVE signal, and the R Level at the DIR, the trader should be bullish as long as the R Level holds support.  In the event that the price moves below the R Level, this negates the positive signal, and suggests that the rest of the trading day is going to be sideways.  With the R Level still in tact, we were offered our first opportunity to buy the market around 8:30 A.M. with a "Buy UP Breakout" strategy.  Our expectation is that once the UP is breached, the market should just "go"...and "go" it did!  The market continued to rise steadily, digested at the UT1 from 11:30 - 12, and then continued higher, ultimately achieving the UT2.  This level is 2 major Price Map levels away from our entry position at the UP and represents the target at which profits should be realized.

CANADIAN DOLLAR

Today's MARKET STATE for CANADIAN DOLLAR: **NEUTRAL POSITIVE SHIFT**

- Technically the MKT has produced a positive signal against a negative trend. On the SELL side accept BREAKOUT, FADE and REVERSAL strategies off major inflection points with the expectation that the negative momentum is going to resume. UP REVERSAL strategies are recommended over a FADE, which should have at least 1 if not 2 challenges to its integrity before executing a short sale against it. A better approach to a straight DP BREAKOUT strategy is to FADE a positive "squeeze" reaction after a negative breakdown signal against the DIR.

- On the BUY side avoid DIR and DP FADE strategies until after the previous session high point or major resistance has been taken out to confirm a break in momentum. Until then, a better opportunity will be a DP REVERSAL strategy. UP BUY BREAKOUT strategies can be profitable but they are aggressive and should look to take profits and potentially REVERSE short at resistance targets.

Today's PRICE MAP Performance for CD

 

Wrap Up
-With an MC Value of +1 and the R Level at the DIR, the CANADIAN DOLLAR has generated a positive signal which remains intact above the R Level.  The Market surged a little after 5 A.M., moving through the UP offering the trader a "Buy UP Breakout" trade. Although this is an aggressive strategy, it was in line with our expectations and in agreement with the Sentiment Bias.  Price action continued through the UT1 and eventually made it up to the UT2, where profits must be realized.  From here, our Market State suggests that profits should be taken, and potentially REVERSE short at resistance targets.  Had the trader followed the expectations for this Market State, he or she could have REVERSED short, and made a profit, as the market fell off back to the UT1 around 10 A.M.

DOW JONES FUTURES INDEX

Today's MARKET STATE for DOW JONES FUTURES INDEX: **NEUTRAL DIGESTION**

- The MKT has a slight negative bias in a difficult "choppy" trade. On the SELL side DP BREAKOUT strategies are valid but should expect a laborious trade.  UP and UT1 FADE and REVERSAL strategies are recommended but profit should be taken at initial targets. The probability is to the downside today but is not a day to press it.

- On the BUY side avoid UP BREAKOUT strategies but rather FADE a negative reaction after a positive breakout signal at the DIR. DP REVERSAL strategies are recommended over FADE strategies as "sloppy" trading conditions are expected. Any DP FADE trades should get confirmation before executing. Position management adjustments should be anticipated for all longs as sideways trading conditions can quickly erase profits.

Today's PRICE MAP Performance for DF

 

Wrap Up
-Today, the DOW JONES FUTURES INDEX was in a "Neutral Digestion" state and our expectation is for a sideways trading day.  With an MC Value of -1 and the R Level at the UT1, there is a negative bias to today's price map.  The DF had an early rally that broke out of the Critical Range around 6:30 A.M.  This move signaled to the trader that a new digestive range was being established.  Since the R Level was placed at the UT1, the analyst is telling the trader that the market has the potential to breakout of the critical range, but the probability favors a failure to surpass the UT1.  As it played out, the market did indeed fail from the R Level, and presented the trader with the highest probability trade of the day, a "Sell R Fade".  From here the market began to retrace its progress, giving the trader an opportunity to realize profits at the UP around 10 A.M.  The market again failed from the R Level around 2 P.M. which would have provided the trader with another opportunity to Sell the R Level for a profitable trade.

S&P 500 INDEX

Today's MARKET STATE for S&P 500 INDEX: **BULL TREND CORRECTION**

- The MKT has a soft tone against an underlying positive trend. On the SELL side accept UP FADE signals on the 1st or 2nd press into the area only. REVERSAL strategies should only be done off the UP or the previous session high point and will immediately work if they are going to. Keep position and risk management tight on these trades. SELL DP BREAKOUT strategies are aggressive but do have potential to be the start of a larger corrective turn. Keep risk management tight.

- On the BUY side accept REVERSAL signals off all major inflection levels, expecting the underlying positive momentum to resume. DP FADE strategies will work better with confirmation as the MKT is in a corrective state and will be probing lower looking for soft spots. Work any BUY DIR and UP BREAKOUT strategies as any positive shift in momentum has the potential to be the start of the next leg higher. DIR FADE strategies after the UP Breakout should use greater leverage.

Today's PRICE MAP Performance for SP

Wrap Up
-The S&P 500 Index has produced a negative signal in an underlying positive market for today.  The "Bull Trend Correction" state with the R Level at the UP tells the trader that the underlying trend is positive; however, today's opportunity is on the short side of the market, below the Sentiment Bias.  The market had a brief rally above the DIR, but failed to hold structure above that level.  From here, the market sold off to the DP, digested for a brief period, and then presented the trader with a "Sell DP Breakout" opportunity around 10:45 A.M.  Although this strategy is aggressive, it proved to be the right one, and the beginning of a corrective move lower.  The underlying tone of the market must be respected in this Market State, and tight position management must be implemented.  The Breakout from the DP continued, virtually uninterrupted, to the DT1, which presented a good opportunity for realizing profits.

GOLD

Today's MARKET STATE for GOLD: **NEUTRAL DIGESTION **

- The MKT has a slight negative bias in a difficult "choppy" trade. On the SELL side DP BREAKOUT strategies are valid but should expect a laborious trade.  UP and UT1 FADE and REVERSAL strategies are recommended but profit should be taken at initial targets. The probability is to the downside today but is not a day to press it.

- On the BUY side avoid UP BREAKOUT strategies but rather FADE a negative reaction after a positive breakout signal at the DIR. DP REVERSAL strategies are recommended over FADE strategies as "sloppy" trading conditions are expected. Any DP FADE trades should get confirmation before executing. Position management adjustments should be anticipated for all longs as sideways trading conditions can quickly erase profits.

Today's PRICE MAP Performance for GC

Wrap Up
-The R Level in the Gold price map worked to perfection today.  The market was in a "Neutral Digestion" state, so our expectation is for a sideways trade within the Critical Range.  With that being said, the placement of the R level at the minor level below the DP is significant.  By doing this, the analyst is telling the trader that the digestive range has been extended, and any negative reaction is capable of taking prices down to the R level.  In this market state, we recommend a "Buy DP Reversal" strategy, which is in agreement with the Sentiment Bias for the day (R Level).  The price dropped down to the R level around 7:30 A.M., immediately reacted back to the DP, retested the R level and then proceeded to rally back through the DP around 8:00, presenting the "Buy DP Reversal" strategy which was validated by the placement of the R below the DP.  From here price rose steadily throughout the morning, testing the DIR a little after 11:00 A.M.  Since our market state is calling for a digestive trading day, profits should be taken sooner rather than later, and the move up to the DIR presented the trader with an opportunity to take profits on a well-executed trade.

EURO CURRENCY

Today's MARKET STATE for EURO CURRENCY: **NEUTRAL DIGESTION **

- The MKT has a slight negative bias in a difficult "choppy" trade. On the SELL side DP BREAKOUT strategies are valid but should expect a laborious trade.  UP and UT1 FADE and REVERSAL strategies are recommended but profit should be taken at initial targets. The probability is to the downside today but is not a day to press it.
- On the BUY side avoid UP BREAKOUT strategies but rather FADE a negative reaction after a positive breakout signal at the DIR. DP REVERSAL strategies are recommended over FADE strategies as "sloppy" trading conditions are expected. Any DP FADE trades should get confirmation before executing. Position management adjustments should be anticipated for all longs as sideways trading conditions can quickly erase profits.

Today's PRICE MAP Performance for EU

Wrap Up
-The EURO CURRENCY performed to expectations today.  There was an early test of the DIR which presented the opportunity for a "Sell DIR Fade" strategy below the R level.  The market came down to the DP, held support for a short period of time, and then broke below the DP, presenting a "Sell DP Breakout" opportunity.  The break below the DP was significant because it signaled a breakout from the "Critical Range" and implied that price was transitioning lower, which indeed was confirmed when the price made new lows below the DT1.

The following web video provides the foundation to our Strategy Based Trading approach.

http://progressive.powerstream.net/008/00102/edu/interactive/js_services/strategy_based_trading/index.html

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Good Trading!

GBPUSD

Today's MARKET STATE for GBPUSD: **NEUTRAL POSITIVE SHIFT**

-The market has produced a positive signal against underlying negative momentum. The sentiment bias R Level at the upper Critical Range extreme UP [UPSIDE PIVOT] is an indication that the positive signal is suspect and is expected to “exhaust” at the UP R Level. This price inflection point represents a “hard” lid to the corrective signal. If the market is indeed going to revert to a soft sideways trade it will reject here. A BREAKOUT however will confirm the positive signal and is expected to provide a “pop” into a higher trade the UT1 [UPSIDE TARGET #!] the minimum target. Don’t fight positive structure above the R Level as it does have the potential to be the start of a transitional trade north. SELL FADE opportunities against the UP R are a better opportunity than a REVERSAL as this level is expected to maintain its integrity if the trade is going to sour. Initiate sales sooner than later on any negative momentum shift as the NEUTRAL nature of the trade state will limit any extended TREND move.

Today's PRICE MAP Performance for GBPUSD

 

Wrap Up

 -Today's move was presented to us early in the session. There was a small pop around 3 A.M. which failed from the DIR setting up a "Sell DIR Fade" strategy. The price fell off sharply, rebounding off of the DP, and eventually breaching the DP around 5 A.M. From here we saw a reaction back to the DP, and the rest of the day took on a gradual advance back toward the DIR.

EURUSD

Today's MARKET STATE for EURUSD: **BEAR TREND**

- Technically the MKT is vulnerable to the offer. On the SELL side accept all BREAKOUT, FADE and REVERSAL signals. The MKT is on edge and any negative signal, especially below the previous session high, is an opportunity. Anticipate a price "zone" around a major resistance point to FADE. Have a plan and be ready. If your stop gets hit and the MKT does not immediately follow through, consider re-entering, even doubling up if there is structure to define low risk.
- On the BUY side REVERSAL strategies can be executed off of major support levels but preferably after an emotional sell off. This is an aggressive strategy and any profits should be realized at the previous support failure points. Avoid DP FADE BUYS even with confirmation, as this is more likely a plateau for a BREAKOUT SELL strategy. UP BREAKOUT strategies are not recommended but do have a better chance of succeeding than a DP FADE.

Today's PRICE MAP Performance for EURUSD

Wrap Up
-Today we had an emotional sell off from the DIR. A "Sell DIR Breakout" strategy would have worked well as the sell off took the market all the way down to the DP with very little hesitation. Following the emotional sell off, price rallied back above the DP, creating a "Buy DP Reversal" opportunity, which continued through the DIR.

Today's Performance GBPUSD *NEUTRAL DIGESTION*

SP500 U'12

TECHNICAL STATE: #NEUT - NEUTRAL DIGESTION TRANSITION

The market in a NEUTRAL DIGESTION TRANSITION has typically been in a NEUTRAL market state for at least 3 trading periods and is ready to make a decisive move out of it’s “range” trade. This is a “pivotal” trading period with the potential to be the start of the next significant advance or decline. This Technical State can present difficult trading conditions with false signals in both directions common. The MKT is gearing up for a move and will either continue to narrow its recent trading range or “bust” out into a new trend. Opportunity exists on both sides of the market, however aggressive risk management should be implemented. REVERSAL and BREAKOUT strategies are recommended over fading momentum. Successful BREAKOUT strategies under these conditions are typically “one-shot” opportunities, using aggressive trail stops.

If the market is going to “go” it should continue to hold structure. If not a REVERSAL back into a messy sideways trade should be expected.

SP500 U'12 - SET FOR SIDEWAYS

TECHNICAL STATE:  #NEU - NEUTRAL DIGESTION

Technically the MKT is in a NEUTRAL DIGESTIVE position with all indicators counter balanced. The MKT is "on the fence" with the potential to go either direction or nowhere. Pick your points and have no expectations. In this market state directional moves are not expected to be sustained. Opportunity exists on both sides of the market, albeit profit potential is limited and should be realized “sooner than later”. Markets that do end a session with a strong directional bias will have trouble sustaining that bias in the coming session, without the support of a like shift in the next session’s MC Value.

SENTIMENT BIAS: NEGATIVE – R=UT1

 The R LEVEL equal to the UT1 [UPSIDE TARGET #1] creates a resistance band with the UP [UPSIDE PIVOT] as upper extreme of this technical state. All trading below this price band will have a negative sentiment bias. Typically in this behavioral framework the market is probing higher with this zone acting as the exhaustive high point of the sideways pattern. Use caution.  Difficult trading conditions are expected. A rise above the R Level is a positive signal with the potential to produce a transition higher.

Optimal Strategy = BUY DP REVERSAL; SELL R FADE; SELL UP REVERSAL

Hedge Strategy = BUY R BREAKOUT: SELL DIR CR BREAKOUT

OPTIONS ANALYSIS 

Neutral Digestion markets offer an opportunity to cautiously sell some option premium.  Caution is warranted as the Neutral Digestion state can be a precursor to a breakout as the coiling action will build power.  There is a negative sentiment bias but directional moves are not expected to be sustained.  A breakout to the downside will bring higher volatiles.