Tenth Consecutive Positive Close / Green Candle (On a Daily Open to Close Basis)?

If the S&P 500 index closes higher today, it would mark the the tenth consecutive positive close on a daily open to close basis. The index is looking at some strong resistance levels in the 2635-2645 band which, if broken, could set a sharp move up to the 2675 area and beyond. However, our models point to a potential consolidation of the recent run up before further upside. If the 2685-75 level is broken to the downside, then that would open further downside move in a swift manner. Caution is advised if engaging in speculative bullish moves while the index is between below the 2635-45 region.

Since Wed, 01/09, our models adopted a bullish bias which will be invalidated if the index registers a daily close below 2580 (moved up today, 01/17). The near term target for this bullish bias is the 2630-2635 band. Market action around that level would further determine the next leg.

Below, you will find our models’ trading plans for today:

Trading Plans for THU, 01/17:

 

NOTE to the novice: The index by itself is NOT tradable. The model plans here based on the S&P index level can be used to trade any instrument that tracks the index – the futures on the index (ES, ES-mini), the options on the futures (ES options), the SPX options, the ETF SPY are just a few examples of the instruments one can adapt these plans to. These plans are NOT an investment advice to buy or sell any specific securities but are intended to aid – as informational, educational, and research tools – in arriving at your own investment/trading decisions. Always consult a Financial Advisor before making your investment/trading decisions if you are not knowledgeable about these markets. 

     

Medium-term/long-term Models: For today, Thursday 01/17, our medium-term models indicate going long on a break above 2635 with an 8-point trailing stop and going short on a break below 2590 with a 10-point trailing stop.

Once a trade is opened and closed through a trailing stop, the models would stay flat for the rest of the session.

Aggressive Intraday Models: For today, Thursday 01/17, our aggressive intraday models indicate going long – with an 8-point trailing stop – on the index crossing above 2628; and, going short – with a 10-point trailing stop – on a break below 2604. For these trades to trigger, the breaks should occur within the regular session hours. Once a trade is opened and closed through a trailing stop, the models would stay flat for the rest of the session.

Due to the intraday nature of these aggressive models, they indicate closing any open trades at 3:50pm and remaining flat into the session close.

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.