Coiled Spring Likely to Unleash Big Move in Either Direction
Russia’s invasion of Ukraine, Allies’ sanctions on Russia and potentially Russian Oil, and the associated surge in oil prices seems to have their impact already baked into the market prices. The wild card is going to be the upcoming FOMC rate decision, which also might be already priced in. Barring any surprises, markets could be setting up for a sudden and violent move up, in the coming week or two.
After entering into an indeterminate state earlier, our models are adapting a cautiously bullish bias, owing to various technicals approaching major support levels here, and the near term possibility for a sharp spike up even if the directionality may be downward for a while. The caution here is because of the unknowns in the war and how it might further unfold.
Positional Trading Models: Our positional models indicate going short on a break below 4290 with a 35-point trailing stop, and going long on a break above 4335 with a 30-point trailing stop. These levels continue to be in force into the overnight markets, hence these model trades are to be used only with instruments that trade overnight (e.g., ES futures).
Intraday/Aggressive Models indicate the trading plans below for today:
Trading Plans for MON 03/07:
Aggressive Intraday Models: For today, our aggressive intraday models indicate going long on a break above 4333, 4318, 4312, 4296, or 4276 with an 8-point trailing stop, and going short on a break below 4329, 4308, 4292, or 4270 with an 8-point trailing stop.
Models also indicate a break-even hard stop once a trade gets into a 4-point profit level. Models indicate taking these signals from 09:36 am EST 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 1-minute closing or a higher time frame – 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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