Wounded Bull, Dancing Bear – No Dominance For Anyone, Yet!
How would you like a forecast that gave you clear entry and exit points BEFORE the markets opened yesterday, and booked you profits of 56.50 points in spite of the market rout that ensued? Hard to find such forecasts/newsletters! Well, our readers just witnessed such improbable results – again – yesterday!
While most of the financial media was predicting the usual “post mid-term” rally in the markets due to the potential Washington gridlock due to the split congress, we issued a “Not So Fast” caution last week and reiterated that “indeterminate” bias for yesterday. True to our models’ cautions, the much touted “post-midterm bull market” rally has proved anything but elusive for the last three sessions and the bulls are on the retreat.
Our models advised caution against getting into the markets on false spikes up. With yesterday’s close below our key support level, the bull case is out and the potential bear case is to be confirmed with the close today.
Model Biases/Outlook:
With the mixed action following the midterm results, our models have adopted a cautious, “indeterminate” stand while between 2795 and 2745.
As we reiterated since the midterm elections last week, “this market is still likely going to be fraught with bull traps rather than bear traps – be cautious when buying into the spikes”. Yesterday’s close of 2726.22 is well below the 2745 level our models indicated. Our models see a potential spike up and caution to wait to confirm the bearish leg by a close below the 2745 level today as well.
A Brief Trace Back of The Current Bias/Outlook
Thursday, 09/27, our models had negated the previously adopted bullish bias and signaled a neutral bias between 2933 and 2887, which was later updated to 2920 and 2880.
On a break below 2880 on 10/10/18, our models executed the pre-published trading plan to book 142 points in profit on a short position! Our models have since adopted a “cautiously bearish” bias. This caution is in view of potential spikes up in a whipsaw mode.
As of the close on Wed, 10/24, our models turned bearish and continue to stay bearish while the index is below 2710. While within the 2710-2770 band, we reiterated an “indeterminate” bias for the market till 11/07.
As of the close on Wed, 11/07, our models negated the indeterminate bias and adopted a “cautiously bullish” bias. This is flipped back to “indeterminate” bias following the midterm election results action and will remain so while the index is between 2795 and 2745. We continue to reiterate these levels for today, Tue. 11/13.
Trading Plans for TUE, 11/13:
Medium-term/long-term Investors
Following big wins during the volatile deep moves last few weeks, the medium-term models have sat out the markets most of the last week, waiting for the mid terms to be over. They are starting the post-mid-terms new trading week flat and already booked 21.25 points in profit on a trade published before the Monday’s market opened!
Last Published Trading Plan/Forecast: “For today, Monday 11/12, our medium-term models indicate going long on a break above 2785, and going short on a break below 2764 during the regular session – with a 10-point trailing stop”.
The Outcome: The index broke below the 2764 level early in the session, triggering a short position with a 10-point trailing stop. By 1130am EST, the index reached around 2732.75 level thus dragging the trailing stop trigger to 2742.75. This stop was hit in the next 30 minutes, booking profits of 21.25 points! The models stayed flat for the rest of the session.
Today’s Plan/Forecast: For today, Tuesday 11/13, our medium-term models indicate going long on a break above 2755, and going short on a break below 2740 during the regular session – with a 10-point trailing stop.
Aggressive, Short-term, Intraday, or Professional Traders
Last Published Trading Plan/Forecast: “For today, Monday 11/12, our aggressive intraday models indicate going long on a break above 2785, and going short on a break below 2775 during the regular session – with a 7-point trailing stop”.
The Outcome: The index broke below the 2775 level early in the session, triggering a short position with a 7-point trailing stop. By 1130am EST, the index reached around 2732.75 level thus dragging the trailing stop trigger to 2739.75. This stop was hit in the next 30 minutes, booking profits of 35.25 points! The models stayed flat for the rest of the session.
Today’s Plan/Forecast: For today, Tuesday 11/13, our aggressive intraday models indicate going long on a break above 2755, and going short on a break below 2740 (same levels as the medium-term models for today) during the regular session – with a 7-point trailing stop.
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:
ecific 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.
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(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.
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(vi) All opinions expressed herein are subject to change at any time, without any notice to anyone.
