Traders' A.I.

Model Biases/Outlook:

The daily close above 2875 of Monday, 08/27, confirmed the credibility of the current bullish momentum, which was later reconfirmed with the breakout to new record highs. The models are clearly with bullish bias for the 24th consecutive day – in spite of Thursday’s small drop amid the trade tensions. 

Our models indicate that there is no risk to the current bull run while the index is above 2860. The index has to close below 2848 for the bullish momentum to suffer any real slowdown. 

A Brief Trace Back of The Current Bias/Outlook

After 14 consecutive days of bearish bias, our models have negated the bearish bias on last Friday, 07/06/18 when it closed at 2759.82! Since then, our models have been consistently forecasting bullish strength and are yet to flash any concerns about any bears in sight, until Friday, 07/27.

After reiterating the bullish momentum for 21 consecutive days, our models abandoned the bullish bias with the action on last Friday 07/27, but have NOT replaced it with bearish bias yet. We were in this “neither bullish, nor bearish” state until Tue 08/07.

Eight days after the “neutral/indeterminate” bias, our models have resumed the bullish bias as of Tue 08/07. We continue this bullish bias for the 24th consecutive day today, Fri 08/31!

Trading Plans for FRI, 08/31:

Medium-term/long-term Investors

(this trading plan for the medium-term/long-term investors is the same as that published for Tuesday, 08/28)

Medium term models indicate a bullish state for the S&P 500 Index, mainly driven by the historic market action last week and the strong breakout on Monday, 08/27.

For today’s regular session, the medium term models indicate a long bias. Considering the runaway bullish action earlier this week, the medium term models indicate going long (buying) after a bit of consolidation below 2885 AND then a breakout above 2885, if it were to occur. If such a consolidation entry opportunity does not present itself, models indicate not chasing the bull but wait for a decent entry point. 

If the break-above-from-below 2885 position were to be filled, then a 12-point trailing stop would be placed. 

Note 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). 

Aggressive, Short-term, Intraday, or Professional Traders

Intraday aggressive models are currently holding flat, after the trailing stop hit the long position (for a profit of 5+ points) opened on Wednesday. 

For today, Friday 08/31, the intraday models indicate a cautious stand, keeping in “mind” that the day marks the end of the month and some potential “window dressing” as well as options-expiry (both end-of-week and end-of-month combined) related activities that could lead to some artificial and swift spikes in either direction. 

In the light of this cautious stand about potential volatility, the models indicate trading off of a widened trading range of 2920-2880. The models would go long on a break above 2920, and go short below 2880 – both with a tight 6-point trailing stop. If a position is opened and later the trailing stop is hit, then the models indicate staying flat for the rest of the session. 

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.

(vi) All opinions expressed herein are subject to change at any time, without any notice to anyone.