The Battle of 3855 (3854.90, to be precise), Attempt 3?
Despite a second attempt yesterday at cracking the 20% down level for the S&P 500 Index from its all time high of 4818.62 – which comes in at 3854.90 – is yet to be breached. If the index survives another attempt to breach it, then it could be an interim bottom; if the index cannot protect it, then things could get ugly. It is anybody’s guess which way it may pan out, of course.
Out models need a daily close above 3935 for the pressure around this level to be eased. While the index is below that level on a daily close basis, the 3855 level battle is in play.
“Bear Trap” caution: One potential scenario could be that the index briefly breaches the level and then rebounds again – market bears need to be cautious about this “Bear Trap” scenario.
Positional Trading Models: Our positional models indicate going long at the close on a daily close above 3935, with no pre-defined stops. This plan remains in effect until otherwise changed.
Intraday/Aggressive Models indicate the trading plans below for today:
Trading Plans for FRI 05/20:
Aggressive Intraday Models: For today, our aggressive intraday models indicate going long on a break above 3942, 3906, or 3866 with a 10-point trailing stop, and going short on a break below 3936, 3898, or 3854 with a 13-point trailing stop.
Models indicate no specific long or short exit levels today. Models also indicate a break-even hard stop once a trade gets into a 4-point profit level. Models indicate taking these signals from 10:16 am 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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