Sell-the-Rumor and Buy-the-News?
The wild ride of the last few days is likely to reach the crescendo today, on the back of the FOMC release at 2pm EST. Predicting the directionality can be a fools errand today – intraday, nimble trading OR very long term investing are the only games worth playing in town. A violent unwinding of the price action could whipsaw both bulls and bears alike – caution is warranted if wading into the murky waters right after the FOMC release is out.
While the Fed tightening (four rate hikes) is already priced in, what happens after today’s FOMC release depends, of course, on what exactly Chair Powell has got to say. While our positional models will stay off the markets today, our aggressive markets have the following trading plans.
Positional Trading Models: Our positional models’ short from last Thursday got closed out via the trailing stop for a gain of 100.36 points, and are currently flat. Positional models will stay flat today as well, and until otherwise stated here.
Intraday/Aggressive Models indicate the trading plans below for today:
Trading Plans for WED 01/26:
Aggressive Intraday Models: For today’s post-FOMC session, our aggressive intraday models indicate going long on a break above 4438, 4403, or 4381 with a 13-point trailing stop, and going short on a break below 4412, 4394, or 4375 with a 14-point trailing stop.
Models indicate long exits on a break below 4430, and short exits on a break above 4417 and 4388. Models also indicate a break-even hard stop once a trade gets into a 5-point profit level. Models indicate taking these signals from 2:01 pm 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 convention).
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 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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