Tired Bear and a Weak Bull – Who Will Gain Strength Tuesday?
As speculated in our forecast for Monday – published Sunday afternoon – the S&P 500 Index has started the fourth week, after three of consecutive losing weeks – with some stoppage in the bleeding and a modest rise of 8.34 points (0.31%). The report clearly mentioned: “The bulls are weak while the bears are facing formidable support level along the 2695-2705 band” (click here to check the full report).
On Monday, the index indeed opened at 2704.95 (at the top of the support band we mentioned) and dropped to a low of 2691.80 (just 3 points below the low end of the band) before reversing the losses to steadily climb throughout the day and close in positive territory. This reinforces our models’ indication that the recent bearsih action could be now hitting a strong support level where bulls might be pushing it up. The action tomorrow, Tuesday, will reveal further clues into this.
On Monday, the index indeed opened at 2704.95 (at the top of the support band we mentioned) and dropped to a low of 2691.80 (just 3 points below the low end of the band) before reversing the losses to steadily climb throughout the day and close in positive territory. This reinforces our models’ indication that the recent bearsih action could be now hitting a strong support level where bulls might be pushing it up. The action tomorrow, Tuesday, will reveal further clues into this.
Model Biases/Outlook:
As we published eleven days back, 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). Last week’s market action confirmed the bearish bias and now the models are outright bearish, which is reiterated for the 7th day in a row.
For Tuesday, the models continue to indicate the risk tilted towards a move up to test the 2735-45 region before further directional bias could pull the index in either direction. On the downside, 2705-2695 continues to act as a strong support band.
Trading Plans for TUE, 07/03/2018:
Medium-term/long-term Investors
The medium term models are now flat, waiting to open a fresh short (sell) on a break below 2690 or go long (buy) on a break above 2755 (admittedly a rather broad range, but that is where the potential inflection points are currently indicated). Meidum-term models indicate bearish bias below 2715, but indicate no new short selling while above 2690. The models indicate no long bias until at least a daily close above 2740 (slightly bullish) or above 2755 (outright bullish) with tight stops.
Aggressive, Short-term, Intraday, or Professional Traders
Those who followed our intraday models on Monday should have made handsome profits for yet another day (click here for the full intraday alert indicating the profit-taking levels). For Tuesday, the aggressive/intraday models indicate indeterminate bias between 2727-2714 – stay flat between these levels. Above 2727, long bias with tight stops/trailing stops. Below 2714, short bias with a trailing stop of 8 points. If short and if the index falls below 2690, increase the trailing stop to 12 points and let the position ride or the stop get 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 affi
liated 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.
liated 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.