Are this Week’s Bullish Moves Sustainable?
As we predicted in our forecast for Wednesday, the markets witnessed a spike up (“artificial prop” of the month-end window dressing?) on the last day of October, and a follow thru on Thursday (possibly driven by the first-of-month flow of funds?). The sustainability of this week’s moves up need to be confirme with the market action today, Friday 11/02! Till that confirms a recovery, our models indicate the continuation of the bearish bias adopted on 10/24.
Last week’s wild moves in the market point to the onset of potential 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 top of the 200+ points profits booked last week, this week the models’ publicly forecast trades have been:
Monday 10/29: +36 points on a short position by the medium-term models’ trading plan; and, +48 points on the short by aggressive intraday models’ trading plan (click here to read the full report and/or to verify this claim).
Tuesday 10/30: +5 points on a short position by the medium-term models’ trading plan; and, +9 points on the short by aggressive intraday models’ trading plan (click here to read the full report and/or to verify this claim).
Wednesday 10/31: +15 points on a long position by the aggressive intraday models’ trading plan (click here to read the full report and/or to verify this claim).
Thursday 11/01: +3 points on a long position by the aggressive intraday models’ trading plan (click here to read the full report and/or to verify this claim).
See below for the details of the outcome of our last trading plans, and the key levels our models are monitoring for further action.
Model Biases/Outlook:
Our models indicate a bearish bias while the index is below the 2710 level, and a bullish bias while above 2770; indeterminate bias between 2710 and 2770. This market is likely going to be fraught with bull traps than bear traps – be cautious when buying into the spikes while below 2770.
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.
As of the close on Wed, 10/24, our models turned bearish and continue to stay bearish while the index is below 2710. While within the 2710-2770 band, we reiterate an “indeterminate” bias for the market today.
Trading Plans for FRI, 11/02:
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.
Last Plan/Forecast: Our medium-term models’ trading plan for Thursday stated: “For today, Thursday 11/01, our medium-term models indicate going short on a break below 2705 during the regular session – with a 10-point trailing stop. No long trade indicated until all the way above 2770” (click here to read the full report and/or to verify this claim).
Last Plan/Forecast’s Performance: On Thursday, the index never breached these levels mentioned, and hence our medium-term models did not open any trades but remained flat for the day.
Today’s Plan/Forecast: For today, Friday 11/02, our medium-term models indicate going short on a break below 2705 during the regular session – with a 10-point trailing stop. No long trade indicated for today as the models take caution against openeing a long trade into the weekend.
Aggressive, Short-term, Intraday, or Professional Traders
/01, our aggressive intraday models indicate going short on a break below 2705 and going long on a break above 2725, during regular session hours, with a 6-point trailing stop” (click here to read the full report and/or to verify this claim).
Last Plan/Forecast’s Performance: On Thursday, the index broke above the 2725 level within the first thirty minutes, thus triggering a long position with a 6-point trailing stop. The index then reached a high of 2734 around 1130am EST, pulling the trailing stop to 2628, which was hit within the next hour, closing the position for a 3 point profit! The models remained flat for the rest of the session.
Today’s Plan/Forecast: For today, Friday 11/02, our aggressive intraday models indicate going short on a break below 2738 and going long on a break above 2760, during regular session hours, with a 6-point trailing stop. If a position is opened and the trailing stop closes it, then the models would stay flat for the rest of the session.
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:
(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.