When Fear-and-Greed Turns Into Hope-and-Despair…
From the last few years of fear-and-greed, the mood on the markets seems to be oscillating between hope-and-despair, indicating subdued spirits on part of the investors. However, the VIX levels are hovering around 20 range, indicating that the downside is not really flushed out, yet. The upcoming earnings season could be the near term driver – both towards hope and towards despair – until the May Fed meeting takes over the chatter.
As we published in our trading plans on Fri, 04/08: “S&P 500 Index is testing a very key support level at 4500, and if it registers a daily close below that, the next immediate support level to be tested is around 4460-4465”. That level is now confirmed broken, and we already broke below the 4460 level as well. As our trading plans published on 03/29, Tuesday – and reiterated on 04/01, Friday – our models confirmed the recent spike up as a bull trap, and indicated the near term directional move to be downwards.
Positional Trading Models: As per our Friday’s positional trading plans, our models went short on the daily close below 4495 (at 4488.67), with a hard stop at 4545. This morning, we are tightening the take-profit on this short to 4448, after 10:55am. If it gets hit, then the models will stay flat for the rest of the session.
Intraday/Aggressive Models indicate the trading plans below for today:
Trading Plans for MON 04/11:
Aggressive Intraday Models: For today, our aggressive intraday models indicate going long on a break above 4502, 4482, or 4463 with a 9-point trailing stop, and going short on a break below 4497, or 4456 with a 9-point trailing stop.
Models indicate long exits on a break below 4475, and short exits on a break above 4440. Models also indicate a break-even hard stop once a trade gets into a 4-point profit level. Models indicate taking these signals from 11:01am ET or later.
By definition the intraday models do not hold any positions overnight – the models exit any open position at the open of the last bar (3:59pm bar or 4:00pm bar, depending on your platform’s bar timing convention).
To avoid getting whipsawed, use at least a 5-minute closing or a higher time frame (a 1-minute if you know what you are doing) – depending on your risk tolerance and trading style – to determine the signals.
IMPORTANT RISK DISCLOSURES AND NOTICES – READ CAREFULLY:
(i) This article contains personal opinions of the author and is NOT representative of any organization(s) he may be affiliated with. This article is solely intended for informational and educational purposes only. It is NOT any specific advice or recommendation or solicitation to purchase or sell or cause any transaction in any specific investment instruments at any specific price levels, but it is a generic analysis of the instruments mentioned.
(ii) Do NOT make your financial investment or trading decisions based on this article; anyone doing so shall do so solely at their own risk. The author will NOT be responsible for any losses or loss of potential gains arising from any investments/trades made based on the opinions, forecasts or other information contained in this article.
(iii) Risk Warning: Investing, trading in S&P 500 Index – spot, futures, or options or in any other synthetic form – or its component stocks carries inherent risk of loss. Trading in leveraged instruments such as futures carries much higher risk of significant losses and you may lose more than you invested in them. Carefully consider your individual financial situation and investment objectives before investing in any financial instruments. If you are not a professional trader, consult a professional investment advisor before making your investment decisions.
(iv) Past performance: This article may contain references to past performance of hypothetical trades or past forecasts, which should NOT be taken as any representation or promise or guarantee of potential future profits. Past performance is not indicative of future performance.
(v) The author makes no representations whatsoever and assumes no responsibility as to the suitability, accuracy, completeness or validity of the information or the forecasts provided.
(vi) All opinions expressed herein are subject to change at any time, without any notice to anyone.
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