NFP Exuberance Adding to the Earnings Euphoria! Markets Feeling Giddy, Yet?
NonFarm Payrolls just crushed the estimates and the index futures are flirting with overnight highs, albeit not pierced them yet. The headlines could add to the exuberance (irrational, yet? Need to ask Greenspan) already pervading the markets based on this week’s earnings beats (on lowered estimates). Once the dust settles, talk could go back to questioning if the Fed is cowing in to political pressure and falling behind the lurking inflation, which could cause another cycle of paranoia and anxiety. How long will this party last?As we have been indicating since 01/09, 2665-75 has been the level to watch for the S&P 500 and the index has closed above the 2675 level yesterday paving the way for a test of the 2700-2710 on the upside, and has tested the target area (2710-2715) during the overnight futures market. If 2715 is successfully pierced, then our models indicate 2740-45 as the next target level. Our models continue to reiterate the bullish bias while the index is above 2655 (raised from the earlier 2642 level).Below, you will find our models’ trading plans for today:
Trading Plans for FRI, 02/01:
NOTE: 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.
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 knowledgeable about these markets.
Medium-term Models: For today, Friday 02/01, our medium-term (high frequency) models indicate going long on a break above 2707, with an 8-point trailing stop and a 2714 target for today. If the target is hit, then the models indicate going long on any further break above 2718, with an 8-point trailing stop. On the other hand, models go short on a break below 2685, with a 10-point trailing stop. For these trades to trigger, the index should cross the specified levels during the regular session hours (no new positions to be opened after 3:45pm EST).
Aggressive Intraday Models: For today, Friday 02/01, our aggressive intraday models indicate going long on the index crossing above 2707 or 2715 or 2695, with an 8-point trailing stop. On the other hand, these models indicate going short on a break below 2688, with an 8-point trailing stop. For these trades to trigger, the breaks should occur within the regular session hours.
Due to the intraday nature of these aggressive models, they indicate closing any open trades at 3:50pm and remaining flat into the session close.
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.