Market Reaching an Imminent Inflection Point?
Monday night, we published this S&P 500 Index forecast for Tuesday: “For Tuesday, 07/17, the models point to a continuation of the bull consolidation, within the broad 2775-2810 band.” (click here to read this report/verify this claim) – and, the market today closed at 2809.55, just about 0.5 below (0.45 to be exact) the 2810 level our models indicated!
Today, Tue 07/17, the market has tested the key levels in both directions – the 2790 and the 2815 – with the session low registered at 2789.24 and the session high at 2814.19. This range is indicated to be the key for the next few sessions in determining the next directional bias.
Market State – The Context:
On Friday 07/06/18, the S&P 500 Index broke out of the 2735-45 range that we referred to in the forecasts all that week long, and triggered long (bought) positions by both our Medium-term and Intraday/Aggressive models, as alerted to in our Intraday Alert published on Friday afternoon (click here to read the report/verify this claim). This action confirmed the strengh of the bulls in the current market and the weakened bear, and continued for the full week by breaking many key resistance levels higher!
On Wed 07/11, the day when the media was talking of escalating trade war and the market appeared to be heading downwards, our models indicated an underlying bullish move forming, and we wrote: “In spite of multiple alarms about geopolitical concerns and increasingly aggressive trade war rhetoric, the bull spirit did not get dented much…This speaks to the strength of the current bullish momentum”. (click here to read report/verify this claim)
On Mon 07/16 and Tue 07/17, the index spent time in a consolidation mode and in testing both the upper and lower bounds of the channel our indicators have been pointing to as the key: 2790-2815.
Model Biases/Outlook:
After 14 consecutive days of bearish bias, our models have negated the bearish bias on last Friday, 07/06/18! Since then, our models have been consistently forecasting bullish strength and are yet to flash any concerns about any bears in sight, and we reiterate that stand for the 11th consecutive day!
Indications are for a range-bound, choppy trade while the index is within the key range of 2815-2790. A daily close outside of this range is needed for the next directional bias to manifest in the market.
If the index manages to break above 2815, then the bullish move is indicated to just jaunt towards the 2870 region in the near future.
Trading Plans for WED 07/18/2018:
Medium-term/long-term Investors
As per the Intraday Alert published on Tuesday morning (click here to read the alert), the medium-term models have entered a long position (bought) at 2810.50.
The alert also mentioned: “If long and the index touches 2814, place a 10-point trailing stop and let the position run or let the stop hit.”. After that, around 3:45pm EDT, The index indeed reached a high of 2814.19 and triggered a trailing stop!! (no, we do NOT believe there is some market beast reading our forecasts and hitting the levels just according to it – but, we still feel flattered with our regular readers’ commenting that way. Thank you!)
(click here to read on the conceptual workings of a trailing-stop)
For Wednesday, medium-term models indicate bullish bias while above 2804. Currently, the trailing stop on the long position has 2804.19 as the trigger, and the models will sell the current position at 2804.19. Models would re-initiate another long on the break above 2815, with a 10-point trailing stop.
No short trade indicated until all the way below 2775. If 2775 is breached, models indicate going short with a target of the 2750-2745 region, and a stop-loss of 8-12 points.
Aggressive, Short-term, Intraday, or Professional Traders
As per the Intraday Alert published on Tuesday morning (click here to read the alert), the medium-term models have entered a long position (bought) at 2795.50, and were 14 points in the profit by the close of the regular session.
The alert also mentioned: “If long and the index touches 2814, place a 10-point trailing stop and let the position run or let the stop hit.”. After that, around 3:45pm EDT, The index indeed reached a high of 2814.19 and triggered a trailing stop!! (no, we do NOT believe there is some market beast reading our forecasts and hitting the levels just according to it – but, we still feel flattered with our regular readers’ commenting that way. Thank you!)
(click here to read on the conceptual workings of a trailing-stop)
For Wednesday, intraday, aggressive, short-term models indicate bullish bias while above the 2804 level. Currently, the trailing stop on the long position has 2804.19 as the trigger, and the models will sell the current position at 2804.19. Models would re-initiate another long on the break above 2810, with a stop-loss at 2804.
No short trade indicated until below 2790, with very tight stops (5 to 8 points). If short and 2775 is broken below, place a 8-point trailing stop and let the position run or let the stop hit.
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 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.