Omicron Worries to Offset Inflation Worries?
The lack of follow through for Friday’s Omicron-induced steep drop, and yesterday’s price action coupled with this morning’s price action so far seems to suggest that the markets may not be panicking about Omicron as it could lead to assuaging some inflation concerns that seem to weigh heavy on the markets. This may leave the markets in a sideways move until something else weighs in.
Positional Trading Models: Our Positional Trading Models exited the last week’s short yesterday afternoon through the 4663 stop for a gain of 51.59 points. As per yesterday morning’s published trading plans, they opened a short again on the break below 4655, with a hard stop at 4663. Models indicate carrying this short today with no changes. If the stop is hit, models will remain flat for the rest of the session.
Intraday/Aggressive Models indicate the trading plans below for today:
Trading Plans for TUE 11/30:
Aggressive Intraday Models: For today, our aggressive intraday models indicate going long on a break above 4660, 4630, 4603, or 4585 with an 7-point trailing stop, and going short on a break below 4655, 4625, 4598, or 4580 with a 9-point trailing stop.
Models indicate short exits on a break above 4570 and 4556. Models also indicate a break-even hard stop once a trade gets into a 4-point profit level. Models indicate taking these signals from 10:15 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 conv ention).
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 NOTES:
(i) For the trades to trigger, the breaks should occur during regular session hours starting at 9:30am ET. Due to the intraday nature of the aggressive models, they indicate closing any open trades at 3:58pm and remaining flat into the session close. No opening of new positions after 3:45pm. Only one open position at any given time. The medium-frequency models may carry open positions overnight and could be closed overnight via any trailing stops instituted – for this reason, these models should be traded with instruments such as index futures or futures options that also trade in the overnight session.
(ii) The index by itself is NOT tradable. The model plans here based on the S&P index level can be used to trade any instrument that tracks the index – the futures on the index (ES, ES-mini), the options on the futures (ES options), the SPX options, the ETF SPY are just a few examples of the instruments one can adapt these plans to.
(iii) Your results of implementing these trading plans depend upon the time frame you choose to trade in (tick-chart, 1-min, 5-min, 15-min etc), the exact stop levels you use, the quality of the execution of your broker, the funding levels and margin levels of your account, your trading style and risk tolerance, and many other such factors.
(iv) These plans are NOT an investment advice to buy or sell any specific securities but are intended to aid – as informational, educational, and research tools – in arriving at your own investment/trading decisions. Always consult a Financial Advisor before making your investment/trading decisions if you are not sophisticated about these markets.
NOTE: The trailing stop is activated at the entry price right when a position is opened. Remember that a “trailing stop” works differently from the traditional stop-loss order. Please bear in mind that the trailing stop’s trigger level would keep changing throughout the session (click here to read on the conceptual workings of a trailing-stop).
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.