Markets Biting off More Than They Can Chew?
Our trading plans stated yesterday morning: “Our models indicate caution to the bears as they indicate avoid shorting the index while it is above 4085 on a daily close basis. It might take a few more sessions for the markets to digest the recent upside moves, before the next leg reveals itself”. The market action over the last 24 hours is making us a bit more cautious about any directional positions until some more clarity develops. Markets may be biting off more than they can chew, and we might need some time to digest the recent gains.
Positional Trading Models: Following our trading plans published yesterday morning, our positional trading models went long yesterday at close (at 4155.12). This morning, models indicate instituting a hard stop at 4141, and taking profit at 4182. If closed out, models will stay flat for the rest of the session.
Intraday/Aggressive Models: Our aggressive, intraday models indicate the trading plans below for today.
Trading Plans for THU 08/04:
Aggressive Intraday Models: For today, our aggressive intraday models indicate going long on a break above 4150, 4136, 4121, or 4100 with a 9-point trailing stop, and going short on a break below 4145, 4133, 4115, or 4097 with a 9-point trailing stop.
Models indicate long exits on a break below 4180 or 4168, and short exits on a break above 4075 or 4066. 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 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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