Earnings Earnings Everywhere

With earnings season picking up, the markets are likely to focus on the basics – the economic fundamentals of the companies underlying the stocks, barring any major surprises on the geopolitical front. While the move up is encouraging to the bulls, below average volume is a concern still.

Since Wed, 01/09, our models adopted a bullish bias which will be invalidated if the index registers a daily close below 2555. The near term target for this bullish bias is the 2630-2635 band. Market action around that level would further determine the next leg.

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

Trading Plans for WED, 01/16:

Medium-term/long-term Models: For today, Wednesday 01/16, our medium-term models indicate carrying the open long position until the stop is hit (currently at 2599.74 on the index level; entered at 2606). Models indicate tightening the trailing stop to 10-points at the open, and lowering the profit target to 2628 (from the original 2630).

Once the long is closed, models would stay flat for the day, wanting to see how the daily close plays out for further analyses.

Aggressive Intraday Models: For today, Wednesday 01/16, our aggressive intraday models indicate going long on the index crossing above 2618 and going short on a break below 2604 during regular session hours – with an 8-point trailing stop. Once a trade is opened and closed through a trailing stop, the models would stay flat for the rest of the session.

Due to the intraday nature of these models, they indicate closing any open trades at 3:50pm and remaining flat into the session close.

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.