Apple, Soured In China!
We wrote in our forecast yesterday, Wed 01/02: “The markets are ringing in the New Trading Year 2019 with the story of weakened (much weaker than expected) China’s economy. Those who understand the global nature of today’s U.S. economy wouldn’t be surprised, if they followed the stories on the trade war and the U.S. tariffs – and, it should not be surprising to see the bears getting bolder and stronger in the U.S. stock market”.
True to our words above, after the markets closed Apple announced disappointing outlook and warned about slowing sales mainly in China. No, we do not have a crystal ball. Yes, it is all about economic factors and geo-political implications that are playing on the market fundamentals. Unfortunately for the bulls, there is a lot of downside potential left before the possibility of any let up in the volatility.
Below, you will find our models’ trading plans for today, Thu 01/03, as well as the results of yesterday’s published trading plans:
Trading Plans for THU, 01/03:
Medium-term/long-term Models
Today’s Plan/Forecast: For today, Thursday 01/03, our medium-term models indicate going short on a break below (from above) 2500 or 2482 or 2460, or going long on a break above (from below) 2465 or 2505. If going long above 2505 or short below 2460, a 10-point trailing stop is indicated.
Last Published Trading Plan/Forecast: For today, Wednesday 01/02, our medium-term models indicate going long on a break above 2505 or 2487, and going short on a break below 2500, or 2470 (which ever might occur during the regular session 9:30am-4:00pm). If going long above 2505 or short below 2470, the trailing stop shall be set at 10-points” (click here to read the full forecast and/or verify this claim).
Results/Outcome:
Wed 01/02: Booked +13.75 points in profits on three longs and two shorts.
The index reached within 0.11 points from 2470 at 9:34am before going up to break above the 2487 level by 10:08am, and the medium-term models opened a long position as per the published plan. The index reached 2508.86 by 11:20am before breaking below the 2500 level by 11:36am, closing the long position with a gain of 13 points and opening a short position simultaneously as per the plan.
The short position was closed on a break above 2505 within the next ten minutes for a loss of 5 points, and a long position was entered into at 2505, with a trailing stop of 10 points as per the published plan. This long position rode the index all the way to 2519.49 reached around 2pm, dragging the trailing stop trigger to 2509.50. This stop was hit in the next ten minutes, closing the long at a gain of 9.50 points.
The index crossed above 2505 in the next five minutes, triggering another long position with a 10-point trailing stop. By 2:32pm, the index reached an interim high of 2516.12, taking the trailing stop to 2506.25, which was hit by 3:05pm, closing the long for a profit of 1.25 points.
The index crossed below 2500 again, triggering another short position around 3:10pm. The index crossed above 2505 around 3:52pm, closing the short position with a loss of 5 points. Since it was less than 15 minutes for the session to close, the models remained flat rather than opening another long position.
Thus, our medium-term models booked profits of 13.75 points (long, +13.00; short, -5.00; long, +9.50; long, +1.25; short, -5.00), following the mechanical pre-defined entry and exit points published before the market opened!
Past results this month:
Our medium-term models started the month of December with indeterminate state and stayed out of the markets throughout the first half of the month.
Mon 12/17: Booked +20 points in profit on a short
Tue 12/18: Booked +9.25 points in profit on a short
Fri 12/21: No trades
Mon 12/24: No trades
Wed 12/26: Booked +14.75 points in profit on a short
Thu 12/27: Long entered at 2455, carried to Friday
Fri 12/28: Booked +28.75 points in profit on a long
Mon 12/31: Booked +56 points in profits on two shorts and two longs.
Aggressive, Short-term, Intraday, or Professional Traders
Today’s Plan/Forecast: For today, Thursday 01/03, our aggressive intraday models indicate going short on a break below (from above) 2497 or 2482 or 2470, or going long on a break above (from below) 2500 or 2485 or 2475. If going long above 2500 or short below 2470, an 8-point trailing stop is indicated.
Last Published Trading Plan/Forecast: Our last aggressive intraday models’ forecast stated: “For today, Wednesday 01/02, our aggressive intraday models indicate going long on a break above 2505 or 2487 or 2476, and going short on a break below 2500 or or 2483 or 2472 (which ever might occur during the regular session 9:30am-4:00pm). If going long above 2505 or short below 2472, the trailing stop shall be set at 10-points” (click here
to read the full forecast and/or verify this claim).
Around 3:10pm, the index broke below 2500 again and triggered another short position. With barely ten minutes left for the session to close, the index broke above 2505, thus triggering a close of the short with a loss of 5 points. The models remained flat for the rest of the session.
Tue 12/11: Booked +0.50 points in profit on a long
Wed 12/12: No trades
Fri 12/14: Booked +14.25 points in profit on a short
Mon 12/17: Booked +51.75 points in profit on a short
Thu 12/20: Booked +26.5 points in profit on two shorts
Mon 12/24: Booked +50 points in profit on two shorts
Wed 12/26: Booked +9.25 points in profit on a long
Thu 12/27: Booked +62.00 points in profit on three short trades and one long trade
Fri 12/28: Booked +10 points on profit one short and two longs
Mon 12/31: Booked +56 points in profits on two shorts and two longs.
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”.
With the historic and wild move up on Wednesday 12/26, our models now indicate the range of 2535-2485 as the broad levels the market is going to be trading within. For any medium-term directional bias to form, the index has to break out of that range.
IMPORTANT RISK DISCLOSURES AND NOTICES – READ CAREFULLY:
(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.