The Lurking Bear Spotted In the Open!

As clearly mentioned in our forecast for Monday – published Sunday night: The bulls seem weakened with the action last week, but still the bearish territory is not in sight yet. The index is approaching the key level of 2740, which could bring in climactic reactions in either direction. (please click here to check the full report)

The markets suffered significant damage from the bear attack today, with our often mentioned key levels (2775-2760-2740) all breached and the market reaching below the 50-DMA and 100-DMA and even the psychologically strong support level of 2700! While the index rebounded from below the 2700 level to regain the handle on the 50 and 100 day moving averages, the index needs to climb back above at least 2755 to negate the current bearish bias. 

Model Biases/Outlook:

Both the medium-term and short-term models’ recent bullish bias was negated last Thursday after noon (click here for our report published on that day), and the bias was slightly bearish to start the week. Monday’s bearish action confirmed the bearish bias and now the models are outright bearish. 

As per the medium-term forecast published June 7th, Wednesday, night, “medium-term models now indicate switching to a slight bearish bias if the index falls below 2740 on a daily close basis.”. We reiterated that level and the market held onto that level for the 17 days in a row before breaching it today, Monday!  Our forecast forecast that this breach could come sometime this week, but it has come on the very first hour of the first trading day! 

Trading Plans for Tuesday, 06/26/2018:

Medium-to-long term investors

Those who followed our medium-term models should have done very well Monday, with the short triggered below 2735 and closed at 2712 with the stop being hit, as per the Intraday Alert 3 issued Monday (click here for details). The medium term models are now flat, waiting to open a fresh short on a break below 2710. 

Meidum-term models indicate bearish bias below 2740, but indicate no new short selling while above 2710. The models indicate no long bias until at least a daily close above 2740 (slightly bullish) or above 2755 (outright bullish) with tight stops. Models indicate neutral bias within 2710-45. 

Aggressive, short term, intraday, or professional traders

Those who followed our intraday models should have done very well on the short position opened on Friday and deliberately carried over the weekend, as per the Weekend Positioning alert published on Friday ! The models entered into a short position at 2759.5 on Friday and carried it over the weekend, with a stop at 2766  (click here for the full report). This position was closed today with the Intraday Alert Monday which put in a 2712 stop deliberately to take the profits – click here for the report (for a profit of a cool 47 points! Very impressive for a short term strategy with order levels given hours ahead of the market opening!). 

The aggressive, intraday models are currently flat (as of 7:50pm EDT, Monday 06/25). For Tuesday, the aggressive/intraday models indicate indeterminate bias between 2710-2735. Stay flat between these levels. Above 2735, long bias with very tight stops (5-10 points). Below 2710, short bias, with a trailing stop of 5-10 points, as the 2700 level could prove to be a pivot. If 2700 and 2790 is breached, then put in a 10 point trailing stop and let the position ride or the stop hit for a profit.    

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.
(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.