Markets Getting Ready to Unwind Violently?

Tomorrow’s ECB Rate Decision, followed by U.S. CPI release which is followed by FOMC meeting minutes and, the ever-present US-China trade talk “settlement” hype…a lot of headline risk for the markets to unwind violently towards new highs (rather than downwards) present this week. What follows once the earnings start trickling in depends on the quality of the earnings.   

Extreme caution should be exercised if shorting this market while SPX is above 2855. A daily close below 2810 has to be registered for our models to negate the current bullish bias.   

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

Trading Plans for TUE, 04/09:

NOTE: 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 Models: For today, Tuesday 04/09, our medium-term models indicate going long on a break above 2904, with a 13-point trailing stop. No short trade is indicated for today.  

Note: For the trades to trigger, the breaks should occur during regular session hours starting at 9:30am ET. By design, these models do NOT open any new positions after 3:45pm. Only one open position at any given time.


Aggressive Intraday Models: For today, Tuesday 04/09, our aggressive intraday models indicate going long on a break above 2904 with an 8-point trailing stop, and going short on a break below 2881 with an 8-point trailing stop. 

Note: For the trades to trigger, the breaks should occur during regular session hours starting at 9:30am ET. Due to the intraday nature of these aggressive models, they indicate closing any open trades at 3:55pm and remaining flat into the session close. Only one open position at any given time. 


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.