Traders' A.I.

Model Biases/Outlook:

With a daily close below 2766 (at 2728.37) on Thu 10/11, our models have adopted a bearish bias. This follows the “neutral” bias adapted by our models on 09/27. Nevertheless, models are sporting caution to the bears regarding a potential corrective spike up in a whipsaw manner, especially driven by geopolitical damage control headlines as well as the Q3 earnings season starting today, Fri 10/12. 

This bearish bias will be negated with a daily close above 2788. 

A Brief Trace Back of The Current Bias/Outlook

On Friday, 09/07, our models had entered an “indeterminate” state and had negated their previous bullish bias, but had not adapted a bearish bias, yet. After reiterating this indeterminate bias for seven consecutive days, our models adopted a “slightly bullish” bias on Wed 09/19. 

For Mon, 09/24, we continued this bullish bias, with a cautious stand about the gap-up on Thu 09/20. On Monday this gap-fill was attempted by reaching within 0.13 points – our models wanted to see it filled fully and published caution to bulls until that is seen. On Wednesday, 09/26, this gap was filled and the market closed down. 

Thursday, 09/27, our models had negated the bullish bias and adopted a neutral bias between 2933 and 2887, which is now being updated to 2920 and 2880. After reiterating this neutral bias for for thirteen days in a row till yesterday 10/11, our models have now adapted a “cautiously bearish” bias. This caution is in view of potential spikes up in a whipsaw mode.   

Trading Plans for FRI, 10/12:

Medium-term/long-term Investors

The medium-term models have closed out the last position (a long) for a 12-point profit last week, opened at 2913 on Wed, 09/19 and have been flat since then (no positions). 

This was followed by another profitable short position opened yesterday at 2780 and then closed via a trailing stop that was triggered at 2733.51 for a profit of 46.49 points. 

With a bearish bias currently adapted, our medium term models are indicating going short today on a break below 2740 during the regular session, going long above 2796 – both with a 12-point trailing stop.  

Aggressive, Short-term, Intraday, or Professional Traders

Our aggressive intraday models carried into yesterday’s session the short opened at 2876 index level from Wednesday. As per the trading plan published yesterday morning, the models adjusted the trailing stop on this short to 23-points. With session low hitting 2710.51, the trailing stop was anchored to 2733.51, which was later hit and the short was closed for a whopping 142+ points profit in two days! 

The models are currently flat, heading into the Friday’s session. Aggressive intraday models indicate going short on a break below 2740, going long on a break above 2787 – both with a 6-point trailing stop.  

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.