Key Levels Under Test This Week 


As we predicted in our forecast for Friday, the sustainability of last week’s moves up needed to be confirme with the market action on Friday 11/02 – which it did NOT! Till we see a credible confirmation of a recovery, our models indicate the continuation of the bearish bias adopted on 10/24. 

As we have said, the wild moves in the market during the last two weeks of October 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! Our models booked a combined total of 100+ points last week (preceded by 200+ points profit booked the week before). Congratulations to all the loyal followers of our models who could take advantage of those trades, and a word of caution to not get too overconfident about the accuracy of the models and never to risk money that you can not afford to lose.  

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 MON, 11/05:


Medium-term/long-term Investors


Following big wins during the volatile deep moves last two weeks, the medium-term models are currently flat and sporting a bearish bias. 

Today’s Plan/Forecast: For today, Monday 11/05, our medium-term models indicate going short on a break below 2710 during the regular session – with a 10-point trailing stop. No long trade indicated until a daily close above 2750.   

Aggressive, Short-term, Intraday, or Professional Traders


As our regular readers have experienced, our aggressive intraday models have performed exceptionally well during the volatility last few weeks, booking more than 300+ points in aggregate profits. The models indicate a general bias on the bearish side and caution on the bullish side of the trades.  

Today’s Plan/Forecast: For today, Monday 11/05, our aggressive intraday models indicate going short on a break below 2715 and going long on a break above 2750, 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 repeat the above trades on subsequent breaks.  


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:

(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.

(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.