Markets Approaching an Inflection Point? (theme continued from yesterday)

As we pointed out, S&P 500 index registered eleventh consecutive green candle on the daily charts (on an open-close basis) on Friday, 01/18, and it was to be expected to be broken, which it did yesterday with the close in the red. The index is now resting near the big resistance level of 2675, and if it closes above 2675 on a daily basis then we are looking at 2710-2715 area as the next stop. With the earnings season kicking into the next gear and with the key technical resistance levels coming into play, this week could be paving the way for the next directional bias for the near term.

Since Wed, 01/09, our models have been sporting a bullish bias which will be invalidated if the index registers a daily close below 2625 (raised, today, from the earlier 2585). The index tested this low yesterday, but recaptured the handle above and avoided closing below that level. Above 2635, our models continue reiterating the bullish bias.  However, our models point to a potential consolidation of the recent run up before further upside.

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

Trading Plans for WED, 01/23:

 

NOTE: The index by itself is NOT tradable. The model plans here based on the S&P index level can be used to trade any instrument that tracks the index – the futures on the index (ES, ES-mini), the options on the futures (ES options), the SPX options, the ETF SPY are just a few examples of the instruments one can adapt these plans to. 

These plans are NOT an investment advice to buy or sell any specific securities but are intended to aid – as informational, educational, and research tools – in arriving at your own investment/trading decisions. Always consult a Financial Advisor before making your investment/trading decisions if you are not knowledgeable about these markets. 

     

Medium-term/long-term Models: For today, Wednesday 01/23, our medium-term models indicate going long on a break above 2663, and going short on a break below 2623 – both sides with a 10-point trailing stop. For these trades to trigger, the index should cross the specified levels during the regular session hours (no new positions to be opened after 3:45pm EST).

Aggressive Intraday Models: For today, Wednesday 01/23, our aggressive intraday models indicate going long on the index crossing above 2652, with an 8-point trailing stop. Models would go short on a break below 2629, with a 10-point trailing stop. For these trades to trigger, the breaks should occur within the regular session hours.

Due to the intraday nature of these aggressive 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.