Yields, US Dollar, and Earnings – Day 3
As we wrote in our trading plans for Tue. 10/25: “The earnings driven momentum which started last week is extending into this week, mainly lead by softening USD and stalling bond yields. Until the Fed and/or the inflation takes the center stage again – likely in a few weeks – these could continue to be the main stories. Whether the big boys are accumulating or selling into this momentum is what could be driving the next leg”.
The big tech earnings are dampening the upside momentum, and the markets appear to be setting up for a bull trap rather than for a bullish next leg. However, it is too early to tell. Amazon and Apple earnings after market close today might reveal further clues as to the health of the economy on main street. Unless unexpectedly strong, the markets could continue to chop around for a while.
Positional Trading Models: Our positional models indicate going short on a break below 3813 or 3795 with a 37-point trailing stop, and going long on a break above 3822 or 3800 with a 45-point trailing stop. These levels will be in effect until explicitly modified or canceled.
Intraday/Aggressive Models: Our aggressive, intraday models indicate the trading plans below for today.
Trading Plans for THU 10/27:
Aggressive Intraday Models: For today, our aggressive intraday models indicate going long on a break above 3800, 3816, or 3837 with a 9-point trailing stop, and going short on a break below 3833, 3813, or 3797 with a 9-point trailing stop.
Models indicate long exits on a break below 3848, and short exits on a break above 3786. Models also indicate a break-even hard stop once a trade gets into a 4-point profit level. Models indicate taking these signals from 12:06 pm ET or later.
By definition the intraday models do not hold any positions overnight – the models exit any open position at the close 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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