A Weakening/Tired Bull? Monday’s Close to Confirm!
Our S&P 500 Index forecast for Friday (07/21/18) – published Thursday night – stated: “Our models indicate that, tomorrow (Friday, 07/20), the index has to close below 2804 or above 2810 for any directional bias to develop; if not, then the tug-of-war would likely continue into the next week!“.
Staying true to the story of the last many days, the index did indeed track this – and registered the session’s high at 2809.70 – just 0.30 points under the upper bound we indicated!! (click here to read this report/verify this claim)
Also, the index closed at 2801.83 – about 2 points below the lower bound mentioned. This is being interpreted by our models as weakening of the recent bull strength. Yet, it is NOT indicated as any strength for bears, yet.
Model Biases/Outlook:
Indications are for a range-bound, choppy trade while the index is within the key range of 2815-2790. If the index probes 2815 on Monday and if it closes above 2815 (it failed to do this on last Thursday, after closing at 2815.62 on last Wednesday), it would confirm the continuation of the current bullish bias.
On the other hand, if the index closes below 2800, it would further weaken the bulls. A close below 2790 would open up a bearish bias.
Trading Plans for MON 07/23/2018:
Medium-term/long-term Investors
As per the Intraday Alert published on last Friday (click here to read the alert), the medium-term models are flat after the trailing stop at 2805 was hit. The models did not enter any new positions since then.
(click here to read on the conceptual workings of a trailing-stop)
For Monday, based on the overnight futures’ market action so far, the models are raising caution to the bulls while the index is below 2804. With no significant economic releases due on Monday, the market will be mostly driven by the technicals of the price action and any geopolitical news headlines.
Medium-term models indicate a bullish bias while the index is above 2804. No short trade indicated until all the way below 2790. If 2790 is breached, models indicate going short with an initial target of 2775 and then the 2750-2745 region, and a stop-loss of 8-12 points (depending on your individual trading style and risk appetite). Stay flat between 2805 and 2790.
Aggressive, Short-term, Intraday, or Professional Traders
As per the Intraday Alert published on last Friday (click here to read the alert), the medium-term models are flat after closing the short position at the market close as per the plan. The models did not enter any new positions since then.
(click here to read on the conceptual workings of a trailing-stop)
For Monday, based on the overnight futures’ market action so far, the models are raising caution to the bulls while the index is below 2804. With no significant economic releases due on Monday, the market will be mostly driven by the technicals of the price action and any geopolitical news headlines.
Aggressive short-term/intraday models indicate bullish bias while above 2810. No short trade indicated until all the way below 2793. If 2793 is breached, models indicate going short with an initial target of 2785 and a stop-loss of 6-9 points (depending on your individual trading style and risk appetite). Stay flat between 2810 and 2793.
IMPORTANT NOTICES & DISCLAIMERS – 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 i
s 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.