Potential Chop Fest Ahead
As we wrote in our trading plans yesterday (Wed, 04/20): “Models are flashing early signs that the index could be nearing another near term crest in the coming days, but are sporting a neutral bias as of now, with a cautious signal to the bulls”. And, the levels our positional trading models indicated (4495-4517) are likely coming into play today and in the next couple of days. Whether the index can break out of 4517 or fall back below 4495 will determine the next directional leg for the near term.
Bulls need to be cautious about a potential bull trap within this range. Unless the Fed indicates any unexpected dovish tone, the markets could be setting up for another leg down.
Positional Trading Models: Our positional trading models are currently in an indeterminate bias. They indicate 4495-4517 as the range for a possible bull trap, if the index manages to get there. A daily close below 4475 will turn the models bearish. Indeterminate state between 4517 and 4475.
Intraday/Aggressive Models indicate the trading plans below for today:
Trading Plans for THU 04/21:
Aggressive Intraday Models: For today, our aggressive intraday models indicate going long on a break above 4503, 4472, 4454, or 4441 with a 8-point trailing stop, and going short on a break below 4496, 4469, 4445, or 4434 with a 9-point trailing stop.
Models indicate long exits on a break below 4500 and 4438, and short exits on a break above 4437. They also indicate a break-even hard stop once a trade gets into a 4-point profit level. Models indicate taking these signals from 09:36am 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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