All the Bad News Already Priced In? Really?
In yesterday’s trading plans, we wrote: “Unless it proves to be a falling knife, bears need to be cautious on Thursday and Friday, for a sudden spike up could ensue”. That spike up already is happening with the moves since yesterday post-lunch session. Which could lead to the other outcome: rise into the inflation numbers and then sell off!
The chatter of “all the bad news already priced in” may not necessarily define the near term direction, but it could define a few hours of the market mood. As we wrote last Friday, 02/04: “At this point, it’s all going to be about interest rates, inflation, and interest rates!”. That is still the primary theme for this week.
Positional Trading Models: Our positional models entered a long yesterday at 4509.19. As of this morning, the models are instituting a hard stop on it at 4518. If closed, the models will be flat for the rest of the session.
Intraday/Aggressive Models indicate the trading plans below for today:
Trading Plans for WED 02/09:
Aggressive Intraday Models: For today, our aggressive intraday models indicate going long on a break above 4558, 4545, or 4525 with a 9-point trailing stop, and going short on a break below 4539 with an 8-point trailing stop.
Models also indicate long exits on a break below 4570, and short exits on a break above 4516. 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 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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