Market Reaching an Imminent Inflection Point – Day 2
Monday night, we published this S&P 500 Index forecast for Tuesday: “For Tuesday, 07/17, the models point to a continuation of the bull consolidation, within the broad 2775-2810 band.” (click here to read this report/verify this claim) – and, the market today closed at 2809.55, just about 0.5 below (0.45 to be exact) the 2810 level our models indicated!
Tuesday night, we publsihed the forecast for Wednesday, which stated: “Indications are for a range-bound, choppy trade while the index is within the key range of 2815-2790. A daily close outside of this range is needed for the next directional bias to manifest in the market.” (click here to read this report/verify this claim) – and, the market today (Wednesday) closed at 2815.62, just 0.62 above the upper range the models indicated as the key!!
The forecast for Wednesday also stated: “If the index manages to break above 2815, then the bullish move is indicated to just jaunt towards the 2870 region in the near future.”. With the index closing just 0.62 above this key level, it is a bit hard to conclude whether this breakout is genuine or a “bull trap” (false breakout that only reverses and goes down the next session)! Nevertheless, today’s market action is an indication of the continuation of the bull consolidation (if not an outright breakout) and there is no bear in the sight.
Market State – The Development of the Current Context:
On Friday 07/06/18, the S&P 500 Index broke out of the 2735-45 range that we referred to in the forecasts all that week long, and triggered long (bought) positions by both our Medium-term and Intraday/Aggressive models, as alerted to in our Intraday Alert published on Friday afternoon (click here to read the report/verify this claim). This action confirmed the strengh of the bulls in the current market and the weakened bear, and continued for the full week by breaking many key resistance levels higher!
On Wed 07/11, the day when the media was talking of escalating trade war and the market appeared to be heading downwards, our models indicated an underlying bullish move forming, and we wrote: “In spite of multiple alarms about geopolitical concerns and increasingly aggressive trade war rhetoric, the bull spirit did not get dented much…This speaks to the strength of the current bullish momentum”. (click here to read report/verify this claim)
On Mon 07/16 and Tue 07/17, the index spent time in a consolidation mode and in testing both the upper and lower bounds of the channel our indicators have been pointing to as the key: 2790-2815. On Wed 07/18, the index mostly tested the upper bound of this key range and is indicating continued strength to the bulls and continued weakness of any bears still left.
Model Biases/Outlook:
After 14 consecutive days of bearish bias, our models have negated the bearish bias on last Friday, 07/06/18! Since then, our models have been consistently forecasting bullish strength and are yet to flash any concerns about any bears in sight, and we reiterate that stand for the 12th consecutive day!
Indications are for a range-bound, choppy trade while the index is within the key range of 2815-2790. If the index probes 2820 on Thursday and if it closes above 2815 again, it would confirm the bullish breakout of today (Wednesday), which would open a rather smooth jaunt towards the 2870 region in the near future. The index has to close below 2804 to cause any slowdown of the bulls!
Trading Plans for WED 07/18/2018:
Medium-term/long-term Investors
As per the Intraday Alert published on Tuesday morning (click here to read the alert), the medium-term models have entered a long position (bought) at 2810.50. This position survived the trailing stop placed at 2804.19 and is was adjusted to 2806.76, as stated in the intraday alert published Wednesday mid-session (click here to read the alert).
(click here to read on the conceptual workings of a trailing-stop)
For Thursday, based on the overnight futures’ market action so far, the current long’s trailing-stop trigger is adjusted to 2808 (10-points trailing from the high of 2818, as of 11:10pm EDT). If the stop is hit, models would re-initiate another long on a break above 2815, with a 10-point trailing stop.
Medium-term models indicate a bullish bias while the index is above 2805. No short trade indicated until all the way below 2790. If 2790 is breached, models indicate going short with an initial target of 2775 and then the 2750-2745 region, and a stop-loss of 8-12 points (depending on your individual trading style and risk appetite). Stay flat between 2805 and 2790.
Aggressive, Short-term, Intraday, or Professional Traders
As per the Intraday Alert published on Tuesday morning (click here to read the alert), the intraday, aggressive, short-term models have entered a long position (bought) at 2795.50. This position survived the trailing stop placed at 2804.19 and was adjusted to 2806.76, as stated in the intraday alert published Wednesday mid-session (click here to read the alert).
(click here to read on the conceptual workings of a trailing-stop)
For Thursday, based on the overnight futures’ market action so far, the current long’s trailing-stop trigger is adjusted to 2808 (10-points trailing from the high of 2818, as of 11:10pm EDT). If the stop is hit, models would re-initiate another long on a break above 2815, with an 8-point trailing stop.
Aggressive short-term models indicate bullish bias while above 2811. No short trade indicated until all the way below 2803. If 2803 is breached, models indicate going short with an initial target of 2794 and a stop-loss of 6-9 points (depending on your individual trading style and risk appetite). Stay flat between 2808 and 2803.
IMPORTANT NOTICES & DISCLAIMERS – 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.
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ccuracy, completeness or validity of the information or the forecasts provided.
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