Traders' A.I.

Model Biases/Outlook:

As we reiterated since the midterm elections, “this market is still likely going to be fraught with bull traps rather than bear traps – be cautious when buying into the spikes”. 

The index has tracked our bearish forecasts and has come down to test the key support level of 2610-2620 and even the 2585 level before taking a breather on 12/10, Monday. The market slide resumed on Friday with the index closing below 2618. Our models are biased to the bearish side and will remain so while the index is below 2618.

2585 next key support level, and if broken the next key support level would be 2565. A daily close above 2620 is needed to negate this bearish bias. 

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 continued to stay bearish while the index is below 2710. While within the 2710-2770 band, we reiterated an “indeterminate” bias.

As of Wed 11/14, we adopted a “mildly bearish” bias while below 2755. With the close below 2685 on Tue 11/20, we updated this to an outright “bearish” bias for Wed 11/21. 

With the close of Wed 11/28, our models negated this bearish bias and adopted an “indeterminate” bias for Thu 11/29. With the close below the key 2618 level, models are now bearish again. 

Trading Plans for MON, 12/17:

Medium-term/long-term Investors

Our medium-term models started the month of December with indeterminate state and stayed out of the markets so far. 

Last Published Trading Plan/Forecast: Our last medium-term forecast stated: “For today, Friday 12/14, our medium-term models are monitoring the 2618 level – a daily close below 2618 will be interpreted as an opening for a fresh leg down. A daily close above 2660 is needed to negate the bearish bias and a close above 2705 for an outright bullish bias. Between daily closes of 2660-2618, models indicate staying flat. There will be NO trades taken today by our medium term models”. 

Results/Outcome: On the fifth day in the range-bound trading we forecast, the daily close on 12/14, Friday (2599.94) was below the range (2705-2618) to turn bearish. Since the daily close was the reference point, no trades were taken on Friday, but the medium-term models have now shifted to a bearish bias.

Aggressive, Short-term, Intraday, or Professional Traders

Today’s Plan/Forecast: For today, Monday 12/17, our aggressive, intraday models indicate going short on a break below 2590 with an 8-point trailing stop, and going long on a break above 2615 with a 6-point trailing stop. For the trades to trigger, the breaks should occur during the regular session hours (9:30am-4:00pm EST).      
  

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 o
f a trailing-stop). 

IMPORTANT RISK DISCLOSURES AND NOTICES – READ CAREFULLY: