So Much Noise and No Real Movement In the Markets?! Stay Patient and Stay Safe In this Whipsaw Trading Environment!
Despite the headline grabbing market moves all this week, the S&P 500 Index closed yesterday – Thursday, 10/18 – just where it closed last Friday! To be exact, the index closed last Friday at 2767.13, and – despite all the wild gyrations in the markets – it closed the last session 2768.78 yesterday! This is what we have been cautioning about “whipsaws” and “choppy” trading environment!
Unless you are a professional trader or trading full time, stay away from dabbling in this kind of market environment – if not, you could end up overtrading, trying to chase apparent directional moves up or down, only to be losing on both your long and short sides of the trading. Be patient until key technical levels are cleared decisively in either direction.
Our S&P 500 Forecast trading plans published before the markets opened on Thursday, 10/18 stated: “the models indicate going short below 2802 with a 8-point trailing stop” (click here to read the full report and/or to verify this claim). This has been tested right at the opening yesterday, and then around 11am EST, triggering a short position at 2801.75. At the session low of 2755.18, the position’s 8-point trailing stop was anchored at 2763.25, which was hit later in the session and the short position was closed for a profit of 38.75 points!
Another big win for a trading plan that gives pre-defined entry and exit points BEFORE the markets open – which can be publicly verified at any time by anyone just by going to that day’s forecast published on the blog!
Model Biases/Outlook:
Our models last indicated that the index had to register a daily close above 2825 for the models’ bias to turn bullish, and below 2780 to turn bearish. Despite the index’s close below this level with yesterday’s closing at 2768.78, our models have NOT turned outright bearish yet – due to the highly critical technical support level of the 200-DMA currently around 2767.
Consequently, our models are currently in an indeterminate state and would make further directional bias determination based on the market action in the next couple of sessions.
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.
With the sharp whipsaw moves in both directions with no real movement since last Friday, our models are currently sporting an “indeterminate” bias within the widened range of 2818 and 2750.
Trading Plans for FRI, 10/19:
Medium-term/long-term Investors
Following big wins in the last few volatile sessions, the medium-term models are currently flat and sporting an indeterminate bias.
For today, Friday 10/19, the medium-term models indicate going long on a break above 2788 with an 10-point trailing stop and going short on a break below 2758 with an 8-point trailing stop.
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 last week! This was followed by a couple more big wins, despite the market not really moving much farther from the close of last Friday!
For today, Friday 10/19, the aggressive intraday models indicate going long above a break of 2783, with a 5-point trailing stop, and going short below a break of 2753, with a 7-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:
(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.