The Battle of 3855 (3854.90, to be precise)
The 20% down level for the S&P 500 Index from its all time high of 4818.62 comes in at 3854.90, which is yet to be breached. After testing the session low at 3858.87 (3855 on the e-mini futures) last Thursday, 05/12, the index rebounded from that level. With yesterday’s meltdown evaporating most of those gains, expect a fierce battle for the 3854.90 level today.
Whether the bulls can protect that level today (on a daily close basis) can determine the next leg on the markets. 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 today, with no pre-defined stops.
Intraday/Aggressive Models indicate the trading plans below for today:
Trading Plans for THU 05/19:
Aggressive Intraday Models: For today, our aggressive intraday models indicate going long on a break above 3865, 3904, or 3937 with a 13-point trailing stop, and going short on a break below 3915, 3898, or 3854 with a 15-point trailing stop.
Models indicate long exits on a break below 3932 or 3860, and short exits on a break above 3920 or 3860. Models also indicate a break-even hard stop once a trade gets into a 4-point profit level. Models indicate taking these signals from 09:31 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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