Markets Running Out of the Benefit-of-doubt Bandwidth?

Most of the supporters have been affording this administration a lot of benefit of doubt for every “strategic move” unveiled through Twitter on trade policy. But, when people’s wallets are hurting, their patience and willingness to forgive the roller coaster rides that ensue twitter tantrums will run out quick. 

How the markets react to this morning’s news on auto-tariff delay (damage control tactic – could be seen as knee-jerk, weak, too little, too late) will hold early clues to the markets’ mood for next week. 

Despite the last two days of recovery rally, the markets are essentially in a no-man’s land (err, no-animal’s land). Our models are in an indeterminate mode with no clear advantage to the bulls or bears.  

Caution is advised against going short while the index is above 2840 and going long while below 2875. Below, you will find our models’ trading plans for today:

Trading Plans for FRI, 05/17:

NOTE: The index by itself is NOT tradable. The model plans here based on the S&P index level can be used to trade any instrument that tracks the index – the futures on the index (ES, ES-mini), the options on the futures (ES options), the SPX options, the ETF SPY are just a few examples of the instruments one can adapt these plans to. 

These plans are NOT an investment advice to buy or sell any specific securities but are intended to aid – as informational, educational, and research tools – in arriving at your own investment/trading decisions. Always consult a Financial Advisor before making your investment/trading decisions if you are not knowledgeable about these markets.  

Medium-Frequency Models: For today, Friday 05/17, our medium-frequency models indicate going long on a break above 2847, with a 10-point trailing stop and a take-profit target of 2860. The models also indicate going short on a break below 2838, with a 10-point trailing stop and a short-exit on a break above at 2832 or 2845.

Note: For the trades to trigger, the breaks should occur during the regular session hours starting at 9:30am ET. By design, these models do NOT open any new positions after 3:45pm. Only one open position at any given time.

Aggressive Intraday Models: For today, Friday 05/17, our aggressive intraday models indicate going short on a break below 2873 or 2863 or 2843 – each with an 8-point trailing stop and a take-profit target of 2835. Models also indicate going long on a break above 2847 or 2865 or 2875 – each with an 8-point trailing stop and a take-profit target of 2895. 

Note: For the trades to trigger, the breaks should occur during regular session hours starting at 9:30am ET. Due to the intraday nature of these aggressive models, they indicate closing any open trades at 3:55pm and remaining flat into the session close. No opening of new positions after 3:45pm. Only one open position at any given time.
NOTE: Remember that a “trailing stop” works differently from the traditional stop-loss order. Please bear in mind that the trailing stop’s trigger level would keep changing throughout the session (click here to read on the conceptual workings of a trailing-stop).

 

 

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.