Fed Pivot, Short Squeeze, or Bull Trap? Day 19
Based on the overnight futures markets’ moves by 9:25am on Thursday, 11/10, we published our trading plans that stated: “Our models indicate not chasing this market to the long side, and not staying short either. Hence, we will be sitting out the market today”. Our models continued to sit out the markets, monitoring the action from the sidelines, till our last trading plans published on Monday, 11/21/22.
To get the perspective on the effectiveness of our call 19 days back, consider this: the S&P 500 Index closed at 3956.37 that day, and it opened today, Tuesday 11/29/22, at 3964.19 – almost froze from when we jumped to the sidelines on 11/10/22! So, our readers who would have followed our models have effectively avoided NINETEEN days worth of choppiness as of today!
Our models are indicating range-bound trading while the index is between 3975 and 3909 (a tight range of about 1% of the index), with a slight bullish bias while the index is above 3900.
Positional Trading Models: Our positional models indicate going long on a break above 3950, with a 40-point trailing stop. Models also indicate going short on a break below 3946, with a 36-point trailing stop and a 3912 short exit. Models also indicate instituting a break-even exit once a trade is in profit by 12 points.
Intraday/Aggressive Models: Our aggressive, intraday models indicate the trading plans below for today.
Trading Plans for TUE 11/29:
Aggressive Intraday Models: For today, our aggressive intraday models indicate going long on a break above 3950 or 3915 with a 9-point trailing stop, and going short on a break below 3946 or 3935 with a 10-point trailing stop.
Models indicate long exits on a break below 3970, and short exits on a break above 3940 or 3920. Models also indicate a break-even hard stop once a trade gets into a 4-point profit level. Models indicate taking these signals from 11:30 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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