Bulls Marked Their Territory Last Week! And, Our Models Proved Their Worth, AGAIN!
On Friday 07/06/18, the S&P 500 Index broke out of the 2735-45 range that we referred to in the forecasts all that week long, and triggered long (bought) positions by both our Medium-term and Intraday/Aggressive models, as alerted to in our Intraday Alert published on Friday afternoon (click here for the full report). This action confirmed the strengh of the bulls in the current market and the weakened bear, and continued for the full week by breaking many key resistance levels higher!
On Wed 07/11, the day when the media was talking of escalating trade war and the market appeared to be heading downwards, our models indicated an underlying bullish move forming, and we wrote: “In spite of multiple alarms about geopolitical concerns and increasingly aggressive trade war rhetoric, the bull spirit did not get dented much…This speaks to the strength of the current bullish momentum”. (click here to read/double check from the full report)
A few readers reached out saying that our call did not make any sense and whether we were blind and were not seeing that the market ended in clear red! Thursday’s and Friday’s bull run matching exactly the levels we have been talking of indicates that quantitative forecasting is much more than what the naked eye can see or casual observation can pick up!
Model Biases/Outlook:
After 14 consecutive days of bearish bias, our models have negated the bearish bias on last Friday! Since then, our models have been consistently forecasting bullish strength and are yet to flash any concerns about any bears in sight.
The bullish bias our models triggered has continued unabated for 5 consecutive trading days and the models indicated that the index was approaching a potential inflection point on Friday 07/13, when it indeed broke the key 2800 level and took out the March high 2801.90 and registered the day’s high of 2804.53 – just under half-a-point away from the upper bound of the 2805 level that our models indicated as the key level to watch for!
For Monday, the models point to a continuation of the bull consolidation. Indications are for a tug-of-war between the bulls and the bears while the index is below the 2805 level of our previously mentioned 2775-2805 band.
On the upside, 2805-2815 band would be a hard battle for the bulls to clear. If the index manages to break above 2815, then the bullish move would jaunt towards the 2870 region in the near future; if broken below 2775, indications are for consolidation towards the 2750-2740 region. Between this broader 2775-2815 band, it would be a choppy, whipsaw range-trading.
Trading Plans for MON 07/16/2018:
Medium-term/long-term Investors
The medium-term models entered into a long position (bought) last Thursday at the index level of 2795.50, and have a stop trigger at 2791.22 as of the close (which was at 2799.22). The position survived through Friday and is currently sitting with a stop at 2798.
For Monday, medium-term models indicate bullish bias while above 2800. Below 2798 will take the models into a flat region (sell the current long). No short trade indicated until all the way below 2765. If long and the index touches 2814, place a 10-point trailing stop and let the position run or let the stop hit.
Aggressive, Short-term, Intraday, or Professional Traders
The short-term/Intraday/Agressive models entered into a long position (bought) last Thursday at the index level of 2785.50, and have a stop trigger at 2791.22 as of the close (which was at 2799.22). The position survived through Friday and is currently sitting with a stop at 2798.
For Monday, intraday, aggressive, short-term models indicate bullish bias while above 2792. Below 2791 will take the models into flat region (sell the current long). No short trade indicated until all the way below 2775, with very tight stops (5 to 8 points). If long and the index touches 2814, place a 10-point trailing stop and let the position run or let the stop hit.
IMPORTANT NOTICES & DISCLAIMERS – READ CAREFULLY:
(i) This article contains personal opinions of the author a
nd 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.
(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.