It’s Non-Farm Payrolls Friday! Add Fed speeches, US-China Trade Talk Headlines – Wild Moves Ahead!

Our medium-term models continued the winning streak yesterday by booking 47.53 S&P 500 index points in profits, and our aggressive intraday models booked 33.50 points in profits, simply by following mechanical trading using the pre-defined entry and exit points as published in our trading plan before the markets opened.Today, the China theme is still in play but with a positive spin raising the hopes that the US-China trade talks next week would yield some market positive developments. Futures are factoring in that with overnight rise of more than 1.25% in S&P 500 as well as in Dow. Added to that sentiment is the “hope” that the recent market turmoil would make Powell speak softly of the interest rate outlook (10:15am speech)

Below, you will find our models’ trading plans for today, Thu 01/03, as well as the results of yesterday’s published trading plans:

Trading Plans for THU, 01/03:

Medium-term/long-term Models

Today’s Plan/Forecast: For today, Friday 01/04, our medium-term models indicate trading off of the 2483-2473 band and 2467-2457 band – going long on a cross above 2483 or 2473, and going short on a cross below 2467 or 2457, during the regular market session (9:30am-4:00pm EST). If going long above 2477 or short below 2462, a 10-point trailing stop is indicated.

Last Published Trading Plan/Forecast: Our last published trading plan stated: “For today, Thursday 01/03, our medium-term models indicate going short on a break below (from above) 2500 or 2482 or 2460, or going long on a break above (from below) 2465 or 2505. If going long above 2505 or short below 2460, a 10-point trailing stop is indicated” (click here to read the full forecast and/or verify this claim).

Results/Outcome:

Thu 01/03: Booked +47.53 points in profits on three shorts and two longs

Reflecting the wild session with widened range yesterday, our medium-term models entered more trades than usual yesterday and booked net profits of 47.53 points (short, +17.40; short, +1.13; long, +17.00; short, +17.00; long, -5.00), following the mechanical pre-defined entry and exit points published before the market opened! The details of each entry/exit are as below:

Around 9:40am the index broke below 2482 triggering a short position. By 10:15, it crossed below 2460 setting a 10-point trail stop on the open short. The short rode the index to the 2454.60 level thus dragging the trailing stop to 2464.60, which was hit around 10:24am, closing the position with a gain of 17.40 points.

Around 10:31am the index broke below 2460 triggering a short position with a 10-point trailing stop (as per the published plan). After reaching an interim low, the trailing stop moved down to 2458.87, which was hit around 10:55am, closing the position with a gain of 1.13 points.

Around 11:11am the index broke above 2465, triggering a long position. After reaching an interim high around 11:45am above 2486, the index broke below 2482 within the next ten minutes closing the long realizing a profit of 17.00 points, and simultaneously opening a short.

The short opened above reached below 2465 and then crossed above 2465 around 1:37pm, closing the short with a gain of 17.00 points, and simultaneously opening a long at 2465.

The long above reached an interim high around 2472 before backing down and crossing below the 2460, closing the long for a loss of 5.00 points around 2:47pm and triggering a short with a 10-point trailing stop.

The short above rode the index all the way to a low of 2443.96 whereby the trailing stop was anchored to 2453.96. As of the regular session close, the short was open with the stop set at 2443.96. Depending on the instrument one trades, this trade can close in different forms: if trading futures, it would be hit during the overnight futures session (which is the default model of this trading plan), and if trading ETFs it will be hit during the next session either at the open or during the session.

Past results this month:

Our medium-term models started the month of December with indeterminate state and stayed out of the markets throughout the first half of the month.

Mon 12/17: Booked +20 points in profit on a short

Tue 12/18: Booked +9.25 points in profit on a short

Wed 12/19: Booked +26 points in profit on a short
Thu 12/20: Booked +26.5 points in profit on two shorts

Fri 12/21: No trades

Mon 12/24: No trades

Wed 12/26: Booked +14.75 points in profit on a short

Thu 12/27: Long entered at 2455, carried to Friday

Fri 12/28: Booked +28.75 points in profit on a long

Mon 12/31: Booked +56 points in profits on two shorts and two longs.

Wed 01/02: Booked +13.75 points in profits on three longs and two shorts.

Aggressive, Short-term, Intraday, or Professional Traders

Today’s Plan/Forecast: For today, Friday 01/04, our aggressive intraday models indicate trading off of the 2483-2475 band and 2467-2457 band – going long on a cross above 2483 or 2467, and going short on a cross below 2475 or 2457, during the regular market session (9:30am-4:00pm EST). If going long above 2483 or short below 2457, an 8-point trailing stop is indicated.

Last Published Trading Plan/Forecast: Our last aggressive intraday models’ forecast stated: “For today, Thursday 01/03, our aggressive intraday models indicate going short on a break below (from above) 2497 or 2482 or 2470, or going long on a break above (from below) 2

500 or 2485 or 2475. If going long above 2500 or short below 2470, an 8-point trailing stop is indicated” (click here to read the full forecast and/or verify this claim).

Results/Outcome:
Thu 01/03: Booked +33.50 points in profits on a total of seven trades (five shorts and two longs).
Reflecting the wild session with widened range yesterday, our aggressive intraday models entered more trades than usual yesterday and booked net profits of 33.50 points on a total of seven trades, following the mechanical pre-defined entry and exit points published before the market opened! The details of each entry/exit are as below:Around 9:40am the index broke below 2482 triggering a short position. By 10:05, it crossed below 2470 setting an 8-point trail stop on the open short. The short rode the index to the 2454.60 level thus dragging the trailing stop to 2462.60, which was hit around 10:24am, closing the position with a gain of 19.40 points.

Around 11:23am the index broke below 2470 triggering a short position with 8-point trailing stop. After reaching an interim low, the short was closed by trailing stop at 2471.46 around 11:36am, for a loss of 1.46 points.

Around 11:37am the index broke above 2475 triggering a long position. By 11:51am, the index broke below 2482 (after rising above it) closing the long for a profit of 7.00 points and simultaneously opening a short.

The index rode below 2470 by 12:38pm, thus instituting an 8-point trailing stop on the open short (opened at 2482). Within the following ten minutes, the index crossed above 2475 closing the short with a profit of 7.00 points and simultaneously opening a long position (around 12:51pm).

By 1:06pm the index broke below 2470 closing the long above for a loss of 5.00 points, and opening a short – with an 8-point trailing stop – simultaneously.

After reaching an interim low of 2458.21 around 1:18pm, the short was closed by the trailing stop at 2466.21 for a profit of 3.79 points.

Around 2:32pm, the index broke below 2470 triggering a short with an 8-point trailing stop. by 3:17pm the index hit an interim low of 2449.23 and dragged the trailing stop down to 2457.23. The stop was hit around 3:32pm, closing the short with a gain of 12.77 points.Thus, the aggressive intraday models booked net profits of 33.50 points (short, +19.40; short, -1.46; long, +7.00; short, +7.00; long, -5.00; short, +3.79; short, +12.77)!

Past results this month: Our aggressive intraday models mostly stayed out of the market in early December.
Mon 12/10: Booked +31.25 points in profit on two shorts

Tue 12/11: Booked +0.50 points in profit on a long

Wed 12/12: No trades

Thu 12/13: Booked -2.25 points in loss on a short

Fri 12/14: Booked +14.25 points in profit on a short

Mon 12/17: Booked +51.75 points in profit on a short

Tue 12/18: Booked +15.25 points in profit on three shorts
Wed 12/19: Booked +41.00 points in profit on two shorts

Thu 12/20: Booked +26.5 points in profit on two shorts

Fri 12/21: Booked -2.00 points in loss on two shorts

Mon 12/24: Booked +50 points in profit on two shorts

Wed 12/26: Booked +9.25 points in profit on a long

Thu 12/27: Booked +62.00 points in profit on three short trades and one long trade

Fri 12/28: Booked +10 points on profit one short and two longs

Mon 12/31: Booked +56 points in profits on two shorts and two longs.

Wed 01/02: Booked +14.75 points in profits on two longs and three shorts.

Model Biases/Outlook:

As we reiterated since the midterm elections, “this market is still likely going to be fraught with bull traps rather than bear traps – be cautious when buying into the spikes”.

With the historic and wild move up on Wednesday 12/26, our models now indicate the broad range of 2505-2435 as the levels the market is going to be trading within. For any medium-term directional bias to form, the index has to register a daily close outside of that range.

NOTE: 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.