Traders' A.I.

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With No Catalysts in Sight, Market Likely Stuck and Not Going Anywhere Fast?

The geopolitical events involving Turkey’s Lira does not seem to be a big concern for the global economy or financial markets – at least, not yet, as we forecast with our clear words:
“However, do NOT write it off and do NOT short the index unless key support levels are broken down.” (click here to read the full report/verify this claim). 

At the same time, there does not seem to be much bullish steam left in the market engine to take the markets above and beyond the recent highs – and resistance – to register any new record highs. Hence, the market might be stuck in the broad range of 2820-2860. 

Unless you are a professional, intraday/medium-frequency trader, engaging in trades within this range might only lead to getting whipsawed. Patiently waiting for the index to break out of this range could prove to be the best course of action. 

Model Biases/Outlook:

In our intraday trading plan for S&P 500 Index yesterday, we wrote: “Above 2844, the models would go long (buy) with a tight trailing stop (about 6 points). Below 2820, models would go short (sell) with a tight trailing stop (about 6 points)”. 


And, the market registered the session high at 2843.40 (just 0.6 points away from our upper bound) and the session low at 2819.88 (just 0.12 points below our lower bound)! One of our regular readers commented that this is what a market crystal ball would work like! 

While we feel flattered with such comparison and take pride in the precision with which our models have been publicly forecasting the key resistance and support levels for the last few months, we deem it necessary to caution our readers/followers of our models to not get too complacent or excited about the accuracy (they do NOT always work so well and can produce forecasts that may be way off sometimes) and to not engage in “all-in” trading. Always trade within your risk profile and as appropriate for your individual financial situations and objectives. 

Barring any further negative developments in the geopolitical space, there is no bearish territory in sight, all the way to below 2820 on the S&P 500 Index. The Turkish Lira’s crisis has so far failed to pierce this 2820 level. 

On the other hand, there is no bullish territory in sight until all the way above 2860. Between 2820 and 2860, it is going to be another 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 bullish bias for the seventh day today, Tue 08/14, 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 TUE, 08/14:

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. 

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