Tug-of-War Along Our Proprietary Key Levels – Week-2, Day-3?
As indicated in our Intraday Alert this morning (click here for details), the market approached one of the three key levels our models are monitoring at 2740 to register the day’s low at 2743.19 and then bounced off of that level to close at 2762.59.
As mentioned in our forecast published last Wednesday night, and reiterated in our alert last Thursday morning, 2790 is the key level for the S&P 500 Index to clear for traders to engage in short-to-medium term buying. Notwithstanding all the media headlines, our models indicate no serious damage to the bulls in today’s session.
As mentioned in our forecast published last Wednesday night, and reiterated in our alert last Thursday morning, 2790 is the key level for the S&P 500 Index to clear for traders to engage in short-to-medium term buying. Notwithstanding all the media headlines, our models indicate no serious damage to the bulls in today’s session.
Model Biases/Outlook:
Both the medium-term and short-term models indicate continued bullish bias, albeit with some caution to confirm break-above/below the key levels (2790-2760-2740) before initating fresh new positions. As per the medium-term forecast published June 7th, Wednesday, night, “medium-term models now indicate switching to a slight bearish bias if the index falls below 2740 on a daily close basis.”. We reiterate that level for the 13th day in a row.
Medium-to-long term Models indicate staying bullish only above 2775, neutral between 2775 and 2740, and bearish below 2740 with tight stops (5 to 10 points, depending on your trading style and risk appetite).
Trading Plans for Wednesday, 06/20/2018:
Medium-to-long term investors
Meidum-term models indicate bullish bias above 2775, but indicate no new buying below 2782. The models indicate no short bias until at least a daily close below 2740 (slightly bearish) or below 2735 (outright bearish) with tight stops. Models indicate staying flat (no positions) within 2775-40.
Aggressive, short term, intraday, or professional traders
Those who followed our intraday models should have done very well on Tuesday, trading on the short side as the trading plan published Monday night mentioned (click here for details): “For Tuesday, the aggressive/intraday models indicate trading from the short side (sell) while the index is below 2765…” – the Index registered the session high of 2765.05 (yes, JUST 0.05 points above our key trading level mentioned) and stayed below 2765 throughout the session.
For Wednesday, the aggressive/intraday models indicate trading from the short side (sell) while the index is below 2755, and from the long side (buy) while above 2765. In spite of the major trade war news headlines, the action today does not indicate much strength to the bears or any serious damage to the bulls. Caution is advised when trading from the short side (sell) while above 2740, as you could get sucked into a bear-trap by false dips such as on Tuesday.
Worth re-iterating: If you are a medium term investor, be patient and refrain from any fresh selling while the index is above 2740. It is okay if you miss some profitable moves to the downside – lost potential profits are more digestible than incurred real losses or protracted holdings of losing positions.
For Wednesday, the aggressive/intraday models indicate trading from the short side (sell) while the index is below 2755, and from the long side (buy) while above 2765. In spite of the major trade war news headlines, the action today does not indicate much strength to the bears or any serious damage to the bulls. Caution is advised when trading from the short side (sell) while above 2740, as you could get sucked into a bear-trap by false dips such as on Tuesday.
Worth re-iterating: If you are a medium term investor, be patient and refrain from any fresh selling while the index is above 2740. It is okay if you miss some profitable moves to the downside – lost potential profits are more digestible than incurred real losses or protracted holdings of losing positions.
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 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.