Traders' A.I.

Last week the S&P 500 Index #SP500 #SPX  #SPY #ES closed lower for the week. This marked second week of losses for the index. Nevertheless, the index continues to stay above the key level of 100-DMA since it closed above the indicator on 5/10/2018.

Importantly, if someone were to observe the close on that day (at 2723.07) and were to go into a slumber (a road trip, hard at work, amnesia…choose your pick for why) and woke up after the market close fifteen days later on 5/25/2018, they would not have missed the market move even by two points!

In that time period, the index moved less than two points despite a steady stream of high profile geopolitical developments and economic data releases and major headline news! Not only does it appear to have stalled, but the index’s trading range was confied to a directionless channel of about 40 points wide for more than two weeks.

Nevertheless, as stated in our reports multiple times last week, the index appears to be in a bull-consolidation phase above the 2715-2705 band. Above 2715, the bullish bias is still undamaged“. The index is still in the bull’s territory and caution should be exercised if short selling. 

Model Biases/Outlook:

Both short term and medium term models indicate strong resistance by the 2735-2745 band AND strong support by the 2710-2700 band. Both bulls and bears are indicated to have to struggle hard to clear these bands in either direction.

If  2735-45 is cleared, then 2800 will come into the sight of the bulls; if 2715-05 is cleared, then 2680 will come into the sight of the market, only beyond which lies any signs bear territory. If neither, expect choppy, range-bound trading to continue until either of the bands is cleared.  

Currently flat, with no positions being held. Medium term models currently indicate no short bias until all the way below 2680. The models indicate fresh buying only above 2640 on a daily close or on a breach of 2645 with tight stops, and selling short only below 2680. Stay flat between these levels.  (carried from the forecast for Thursday, 5/24/18)

Models’ take-profit stops at 2720 were hit on Friday, 5/25 and profits were booked on the longs. The aggressive models are currently flat (no positions). Models indicate using 2710-2720 as a pivot to trade from either long or short side: buy/long above 2720 – profit target 2730-35, stop loss 2710-2705; sell short below 2710 with tight stops depending on one’s trading style and risk appetite (short sellers to keep in mind: we are trading in the bull’s territory, even if the bull’s appear not strong).