Traders' A.I.

Model Biases/Outlook:

The daily close above 2875 of Monday, 08/27, confirmed the credibility of the current bullish momentum, which was later reconfirmed with the breakout to new record highs. Our models continue to sport the bullish bias – in spite of the simmering trade tensions. 

Models indicate that there is no risk to the current bull run while the index is above 2885. The index has to close below 2855 for there to be any bearish concern. Models would be in “indeterminate” state between 2885 and 2855. 

Note that the markets have tested this 2885 level in the last two sessions for entering this “indeterminate” state yesterday but avoided getting into that region by rebounding off of the lows and not closing below 2885. Whether that level will be pierced today, Thu 09/06, will be something our models would be monitoring closely.   

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 were 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 bullish bias for the 30th consecutive day today, Thu 09/06!

Trading Plans for THU, 09/06:

Medium-term/long-term Investors

(this trading plan for the medium-term/long-term investors has remained relatively unchanged since Tuesday, 08/28)

Medium term models indicate a bullish state for the S&P 500 Index, mainly driven by the historic market action last week and the strong breakout on Monday, 08/27.

For today’s regular session, the medium term models indicate a long bias. Considering the runaway bullish action in the past week, the medium term models indicate going long (buying) after a bit of consolidation below 2885 AND then a breakout above 2885, if it were to occur. If such a consolidation entry opportunity does not present itself, models indicate not chasing the bull but just waiting for another decent entry signal. 

As mentioned earlier, note that the index come 0.13 points close to this 2885 level yesterday, Tue 09/04, before rebounding. Whether it would pierce that level today will be something our models would be monitoring closely. 

If the break-above-from-below 2885 position were to be filled, then a 12-point trailing stop would be placed. To avoid getting whipsawed, wait for a confirmation of close below this level on a 4-hourly or hourlychart, depending on your trading style.  

Note 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

Intraday aggressive models are currently flat. For today, Thu 09/06, the intraday models indicate a cautious stand, owing to the recent record highs and the ongoing trade tensions, coupled with the ending of the earnings season. 

In the light of this cautious stand, the models indicate trading off of a widened trading range of 2912-2882. The models would go long on a break above 2912, and go short below 2884 – both with a tight 6-point trailing stop. To avoid getting whipsawed, wait for a confirmation of close below this level on a 60-min, 30-min, 15-min or lower granularity chart, depending on your trading style.  If a position is opened and later the trailing stop is hit, then the models indicate staying flat for the rest of the session. 

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.

(vi) All opinions expressed herein are subject to change at any time, without any notice to anyone.