Traders' A.I.

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Is the Retail Money Chasing the YoYo Up-and-Down and Getting Whipsawed?

In the overnight S&P 500 Index futures market, the geopolitical events involving Turkey’s Lira seems to have faded into the background, the US-China trade war seems to see some “truce” potential (can you count how many times you have read this in the news headlines in the last few weeks? Yes, many!), and Walmart seems to exude the (last?) oomph of the earnings factor…what ever the financial media headlines may have you believe, the markets look suddenly strong this morning when it looked like the bottom was falling off just the other day! Professional traders who have been around the market for a while recognize this as just the nature of the headlines beast and do not necessarily draw their trading plans based off of the headlines! 

On the other hand, most amateur traders – trading off financial media headlines – would most often end up getting whipsawed and consistently end up in losing trades, running from one headline to another! One would be better served by paying attention to the key market levels and other quantitative parameters of the markets! Regular readers of our forecasts have seen the applicability of key levels in practice over the last few months – anyone can easily refer back to these forecasts and verify their efficacy at any time as these all are available for free public access at this blog.

Model Biases/Outlook:

Yesterday’s close of 2818.37 highlighted – yet again – the important role key market levels play as well as the continuing display of our models’ ability to forecast those key levels, as it was just 0.37 points above the lower bound (2818) of the range given by our intraday models to turn bearish, as stated in yesterday’s forecast! Consequently, our models are NOT bearish yet!

On the other hand, there is no clear bullish territory in sight until a daily close all the way above 2860. Between 2818 and 2860, it would continue to be in a choppy trading range.

A Brief Trace Back of The Current Bias/Outlook

After 14 consecutive days of bearish bias, our models have negated the bearish bias on last Friday, 07/06/18 when it closed at 2759.82! Since then, our models have been consistently forecasting bullish strength and are yet to flash any concerns about any bears in sight, until Friday, 07/27.

After reiterating the bullish momentum for 21 consecutive days, our models abandoned the bullish bias with the action on last Friday 07/27, but have NOT replaced it with bearish bias yet. We are in this “neither bullish, nor bearish” state until Tue 08/07.

Eight days after the “neutral/indeterminate” bias, our models have resumed the bullish bias as of Tue 08/07. We continue this (slightly) bullish bias for the ninth day today, Thu 08/16, but raise some caution about the bulls losing steam in the wake of geopolitical headlines and the drying up of positive earnings stream due to the end of the earnings season.  

Trading Plans for THU, 08/16:

Medium-term/long-term Investors

Medium term models indicate a slightly bullish state for the S&P 500 Index. The models are currently flat (no positions) and are waiting for a break out to go long. 

For today’s regular session, the medium term models indicate going long on a break above the index level of 2860, with a 10-point trailing stop. No bearish bias until all the way below 2820. Meditum-term models indicate waiting for a daily close below 2820 to turn bearish. 

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). 

Aggressive, Short-term, Intraday, or Professional Traders