Traders' A.I.

Friday’s action in S&P 500 stayed above our often-mentioned key level of 2760 and confirmed the dominance of the bulls on the market – or, the lack of dominance of the bears on the market. Considering the North Korea summit tomorrow, it might be prudent to wait to establish any new positions today. Intraday, aggressive traders may want to be careful getting stuck in an overnight position – if engaging in such trading, better to end the day flat.

Model Biases/Outlook:

Both the medium-term and short-term models indicate strong bullish bias, albeit with some caution to confirm the key levels before initating fresh new buying. As per the medium-term forecast published Wednesday night, “medium-term models now indicate switching to a slight bearish bias if the index falls below 2740 on a daily close basis.”. 

Medium-to-long term Models indicate staying bullish above 2760, flat between 2760 and 2740, and bearish below 2740. 

Medium term models went long on Wednesday at 2754, as per the trading plan published for Wednesday: “the models indicate staying flat below 2753, and buying within 2753-55 range with tight stops”. The models had a stop-loss at 2765 on the index which was hit on Friday and the models took profits and are currently flat (no positions).

The models indicate no short bias until at least a daily close below 2740 (slightly bearish) or below 2735 (outright bearish). Models indicate staying flat (no positions) between 2760-35. 

Medium term models indicate taking NO NEW positions today in the wake of the geopolitical risk of tomorrow’s summit.

Aggressive, intraday models have stayed out of the market on Friday, according to the trading plan which indicated trading from the long side above 2785 and from the short side below 2760 as the index stayed within this band and did not trigger any trades in either direction.

For today, Monday, the models indicate trading from the long side while above 2790 and from the short side while below 2765. Use tight stops when buying long or selling short as short term models do NOT want to hold overnight positions considering the geopolitical risks surrounding the North Korea summit tomorrow.