Deep Correction – Bears Currently Celebrating…
Despite the big spike up in the markets yesterday, Thursday 10/25, the overnight futures are down almost equally – negating all the move up from the last session! Such is the volatility and the whipsaw trading when markets go through regime change. All the indications point to the onset of regime change in the markets from the long bullish regime to a bearish one!
Our models advise caution against getting into the markets on false spikes up. One needs to confirm the moves against key levels to enter into more probabilistic trades.
In the mean time, our models continue to churn out winning trade after winning trade in this volatile, choppy markets, with forecasts and trading levels given publicly before the market opens each trading day!
On Tuesday, our medium-term models closed a short position for a 55-point profit, and our aggressive intraday models have closed profitable trades again, in spite of the volatile market action! This has been followed by opening another short position by our aggressive intraday models on Wednesday at 2720. On Thursday, that short position was carried into the trailing stop hit at 2766, closing the short for a 54 point profit!
See below for the key levels our models are monitoring for further action.
Model Biases/Outlook:
Due to the fact that the index has closed below the highly critical technical support level of the 200-DMA currently around 2767 over the last three trading sessions, our models are sporting a bearish bias, with a possibility for a spike up in the coming days. The bearish pressure will continue as long as the index is below the 2710 level and there is no bullish territory in sight until all the way above 2755.
A Brief Trace Back of The Current Bias/Outlook
Thursday, 09/27, our models had negated the previously adopted bullish bias and signaled a neutral bias between 2933 and 2887, which was later updated to 2920 and 2880.
On a break below 2880 on 10/10/18, our models executed the pre-published trading plan to book 142 points in profit on a short position! Our models have since adopted a “cautiously bearish” bias. This caution is in view of potential spikes up in a whipsaw mode.
Last three days’ close below the 2767 level coupled with the sharp drop below 2700 for the last two sessions in a row has led our models to currently sport a bearish bias as of the close on Wed, 10/24.
Trading Plans for FRI, 10/26:
Medium-term/long-term Investors
Following big wins during the volatile deep moves this month, the medium-term models are currently flat and sporting a bearish bias.
Yesterday’s trading plan stated: “For today, Thursday 10/25, our medium-term models indicate going short on a break below 2650 during the regular session” (click here to read the full report and/or to verify this claim). Yesterday’s session was confined to within this range and hence no trade was taken by our medium-term models.
For today, Friday 10/26, our medium-term models indicate going short on a break below 2645 during the regular session – with a 10-point trailing stop. No long trade indicated for today.
Aggressive, Short-term, Intraday, or Professional Traders
Our aggressive intraday models closed a short position with a whopping 142+ points profit during the sharp drop in the markets the week ending 10/13/18! This was followed by a couple more big wins, despite the market not really moving much farther from the close of last Friday, 10/12! And, then a couple more winning trades during the sharp down moves last two sessions.
For the last trading session, the models bagged yet another winning trade, by closing – through the trailing stop at 2766 – the short position opened at 2720 on Wednesday, thus booking a 54 point profit!
For today, Friday 10/26, our aggressive intraday models indicate going short below 2648 with a 6-point trailing stop. If the short is opened and the trailing stop closes it, then the models would stay flat for the rest of the session. No long trade to be taken today.
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:
(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.
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