Traders' A.I.

Model Biases/Outlook:

The nature and the quality of the S&P 500 Index’s breakout to new high on Friday had been under one point from the upper bounds we forecast, and thus we need more confirmation of the strength in today’s close and the intraday market action. 

Our models indicate that there is no big harm or impetus to the current bull run while the index is between 2875 and 2835. For today, Monday 08/27, a daily close above 2875 is needed for the current bull run to maintain momentum. However, the index has to close below 2840 for the bullish momentum to indicate any slowdown.  

A Brief Trace Back of The Current Bias/Outlook

After 14 consecutive days of bearish bias, our models have negated the bearish bias on last Friday, 07/06/18 when it closed at 2759.82! Since then, our models have been consistently forecasting bullish strength and are yet to flash any concerns about any bears in sight, until Friday, 07/27.

After reiterating the bullish momentum for 21 consecutive days, our models abandoned the bullish bias with the action on last Friday 07/27, but have NOT replaced it with bearish bias yet. We were in this “neither bullish, nor bearish” state until Tue 08/07.

Eight days after the “neutral/indeterminate” bias, our models have resumed the bullish bias as of Tue 08/07. We continue this (slightly) bullish bias for the twentieth day today!

Trading Plans for MON, 08/27:

Medium-term/long-term Investors

Medium term models indicate an “indeterminate” state for the S&P 500 Index, mainly due to the historic market action last week. The models have rejected the Friday’s breakout and the close under half-a-point away from the key resistance forecast, and hence are indicating staying flat for the day today.

For today’s regular session, the medium term models indicate a “hold” bias. Models indicate sporting a bullish bias after a daily close above 2875. No bearish bias until all the way below 2835. Models indicate waiting for a daily close below 2835 to turn bearish.

Aggressive, Short-term, Intraday, or Professional Traders

Intraday aggressive models indicate an “indeterminate” trading bias for the S&P 500 Index at today’s open of the regular session. The models have rejected the Friday’s breakout with the high and the close within half-a-point range from the key resistance levels forecast, and hence stayed flat as of Friday’s close and into the open of the regular session today. 

For today, Monday, the models would go long above 2878 and go short below 2750 – both with a tight, 6-point trailing stop. If any position is entered into and then hit by a trailing stop, the models would repeat the trade with the above levels as the key.  

To avoid getting caught up in whipsaws and overtrading, wait for a confirmation of the breakout of these levels on at least a 15/5/1 minute bar or two, depending on your trading style and risk profile.

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.