TODAY IN THE MARKETS - WED, 5/23

S&P 500 
THE GIST (The "What"):

The index rebounded after reaching the day’s low at 2707.38, erasing some of day’s losses and registering the day’s high at 2731.97 as investors digested these latest developments and as Industrials and Defensive stocks gained. With 7 out of

11 primary sectors ending the day lower, the index closed the session off lows at 2727.76, losing 0.20% (down 5.53 points).

THE DETAILS (The "How & Why"):

 Please check the outlook and forecast for tomorrow, Fri 5/25 below:


The S&P 500 index continues to be range bound between the 2700 and 2745 band, successfully testing the strong support level of its 100 DMA found at 2710 several times this month. Stocks were sent tumbling at the opening after President Trump called off his summit with North Korean leader Kim Jong Un which was due to take place on June 12. Several other news headlines also played in the background weighing down on the market sentiment during the early trading session.

Defensive stocks benefited from the latest developments in geopolitical and trade tensions, led by a rally in Raytheon Company. Industrial stocks also recovered from the sell-off experienced post the trade truce news between U.S and China gaining 0.60%. Meanwhile, global automakers stocks such as Volkswagen AG, Daimler AG and BMW AG fell after President Trump announced his decision to launch a national security investigation on cars imported into the U.S. in an attempt to renegotiate the NAFTA agreement. U.S. automakers such as Ford Motor Co. and General Motors, however, gained over this latest development.

Oil prices fell for the third straight day weighing down on the Energy sector and making it the biggest drag on the index, losing 1.67%. Financial sector lost 0.71% as the 10-year Treasury yield settled at 2.978%, staying below the psychologically important 3% mark. Rising mortgage rates coupled with surging home prices weighed down on the Real Estate sector.

On the economic front, the initial jobless claims reached the highest level in seven weeks at 234,000 as against the expected 220,000. Meanwhile, shortage of properties resulted in the existing home sales to come out below expectations.

S&P 500 OUTLOOK for FRI 5/25

Please check the outlook and forecast for tomorrow, Fri 5/25 below:

https://tradersai.blogspot.com/2018/05/s-500-outlook-for-fri-0525.html

S&P 500 testing the 2715-05 consolidation band AGAIN

https://tradersai.blogspot.com/2018/05/s-500-testing-2715-05-consolidation.html

TODAY IN THE MARKETS - WED, 5/23

S&P 500 

THE GIST (The "What"):

Extending yesterday’s losses the S&P 500 index opened the session down 10.24 points as skepticism over the US–China trade agreement grew after President Trump told reporters that the current state of talks appear “to hard to get done” while also casting doubts on his upcoming summit with North Korea leader Kim Jong Un. However, after the release of FOMC minutes at 2pm EDT indicated that the Federal Reserve will not get aggressive in interest rate hikes, the day's losses were erased and the index rallied to end the session at 2,733.29, gaining 0.32% and 8.85 points above previous day’s close. 


As mentioned in the outlook for tomorrow, the consolidation forecast last night can be deemed as completed today.

THE DETAILS (The "How & Why"):

The index traded mostly lower but holding onto the support level of around 2710 (as alerted in the real time commentary this morning) ahead of the release of FOMC meeting minutes due in the afternoon as investors looked for clues on the pace of future rate hikes expecting an increase in fiscal stimulus after President Trump indicated a possibility of additional tax cuts before November.
Financial stocks led early session losses after the Congress passed a plan to repeal 2010 Dodd- Frank Act, exempting small and medium sized banks from the strictest regulations passed post the 2008 financial crisis. The 10 –year yield pulled back after the release of FOMC minutes, settling at 2.995%, falling below the psychologically important 3% mark leading the Financials sector to be the biggest drag in the index with a 0.60% loss.

Industrials continued to be battered as investors digested the latest development around US–China trade tensions, albeit erasing some losses during the final hour of trading, losing 0.15% intraday. Energy stocks also fell for the second straight day as crude oil prices slumped on the back of an increase in U.S. crude stockpiles coupled with the expectation that OPEC might lift their oil output ahead of supply shortage from Iran and Venezuela. 

Tiffany & Co. and Ralph Lauren Corp. were the best performers gaining 23.39% and 14.34% respectively, on the back of solid performance that topped estimates. On the economic data front, the IHS Markit U.S. Manufacturing Managers index for May was up 56.6 from 56.5 last month, indicating economic expansion. Meanwhile, new-home sales in April came out below expectations at a seasonally adjusted rate of 662,000.

S&P 500 Index #SPX testing 100dma at 2710

S&P 500 Index #SPX testing the 100 Day Moving Average at 2710. If it breaks, next stop would be the strong support level of 2705-2700. 

Our medium term models indicate that the current weakness in the index is a consolidation rather than a sign of outright bearisness. If short selling the market, be cautious of potential rebounds off of the 2705-2700 support band or off of the 2690 support level. 2680 has to be broken for the models to turn bearish. 

For the indicated trading strategies for medium-term investors or aggressive/professional/intraday traders, please see the detailed trading plans in the nightly outlook published last night. 

Do we have a crystal ball to predict the markets accurately, day after day? 



#SP500 #SPX #SPY #ES

DO WE HAVE A MARKET CRYSTAL BALL?

You read it here in last night's S&P 500 OUTLOOK FOR TOMORROW, WED 05/23 - published before 5pm yesterday - which said: "As published last night, the index is likely heading to consolidate into the 2715-2705 band, before any further directional bias could develop.". 
S&P 500 Index futures already hit 2704.50 (0.50 points more than predicted) in the overnight session - within less than 12 hours after that forecast! Yes, regular readers can figure that this is more than a few times that our forecast levels are coming true. No, it still does NOT make our (or, anyone's) models and algos any crystal ball that can guarantee you trading riches! But, the interesting and relevant question you should ponder is: what do you think YOU (or, your friend or co-worker who seems so much into the markets and trading - do them a favor by sharing this post/blog) could do if you had such a market crystal-ball which gives you the forecasts that keep coming true day after day?  Human psychology and behavioral finance research say, "not much, really!". Because, your trading results are determined mainly by your trading psychology and discipline than by some magical predictive tool in your hands.  Use these forecasts and predictions just as a tool to train and guide your discipline and trading psychology, and then it could do wonders to your investment/trading results!  Happy market-day ahead!

#SP500 #SPX #SPY #ES #Bulls #Bears #Stocks #Bonds #Invest #Trade

S&P 500 TODAY, TUE. 05/22 - THE WHAT, HOW AND WHY:

Riding on Monday’s optimism, the index opened with slight gains (up 5 points) led by the Industrial stocks. Early morning gains lost steam on reaching the day’s high at 2,742.24 following mixed signals from the White House around U.S.-China trade policies. Trading within a narrow range while attempting to hold on to the gains, the index accelerated the loss in the final hour of the session as President Trump casted his doubts on the historic summit with North Korea. With only 4 primary sectors ending the day with gains, the index closed near session low at 2,724.44, down 8.57 points, losing 0.31%. 

Industrial stocks extended their Monday’s rally during session opening, further supported by the announcement of a cut in import duties by the Chinese government on passenger cars from 25% to 15%, lifting Auto stocks along. Technology sector also received a boost as both countries indicated that they were nearing an agreement to settle the ZTE Corp controversy. But gains reversed as the optimism faded after President Trump announced his displeasure with the recent trade talks.

Energy was the worst performing sector, losing 1.28% as crude oil prices retreated from their multi-year high levels, followed by a 1.25% loss in Industrials sector. Weaker third quarter guidance due to rising costs by Kohl’s and Toll Brothers Inc. also weighed down on investor sentiments. Steel stocks however recovered from their Monday’s slump after U.S. announced heavy duties on Chinese steel shipped from Vietnam while maintaining the previously imposed duties. Financials were the top gainers in the index, gaining 0.59% despite a drop in Treasury yields as investors look forward to the unwinding of the 2010 Dodd-Frank regulation. 

S&P 500 OUTLOOK and TRADING PLAN for TOMORROW, WED. 05/23

The market looks like it's over the US-China trade talks euphoria and might need something newer to keep the bulls feeding. If not, we might be heading to a bit of consolidation this week. SPX at 2,736 as of this post (10:52am) - today's close might offer some short term directional bias clues. As per the outlook published last night, "Those who are not holding long positions (sold too soon?) might want to follow the caution already published: “...wait for a better re-entry opportunity instead of trying to chase the long trade or a prematurely short trade”. Let the market's close today guide your strategy, rather than some per-conceived "gut-feel" or "wish".  Happy trading/investing!

S&P 500 OUTLOOK AND TRADING PLAN FOR TOMORROW - TUE, 05/22:

Bulls relaxed in their territory - no bears in sight...yet!

Last week's wrap-up published Friday night said: "While today's - and, this week's - market action is a bit weak on the bulls' part, it does not damage the strong bullishness which unfolded last week". The bullishness that I was referring to continued to get stronger today. There is no bear territory in the near sight. There is no meaningful dent indicated to the bullishness until the index falls below the 2690-2680 band. Exercise caution if feeling tempted to short sell on days the index appears weak. Read below for the specific levels to look for entries/exits that match your trading style and risk appetite.

Medium-to-Long term Investors:
Those who followed the medium term models would still be holding their longs as of the end of today's regular session (entered and riding from last week). If long, raise your take-profit stop to 2717 as there could be a little consolidation into the 2715 level and then we can not foretell how it might develop further. Be happy with the profits realized if it hits - if it does not hit, be happy knowing that it is accumulating more profits. Those who are not holding long positions (sold too soon?) might want to follow the caution already published: “...wait for a better re-entry opportunity instead of trying to chase the long trade or a prematurely short trade”.
 
As wrote on Friday's market commentary, medium-term models currently indicate no short bias until all the way below 2680. Medium term indications are for a long bias above 2615, and a short bias below 2680. Stay flat between these levels.

Aggressive, Short Term, Medium-Frequency, Professional Traders:

Those who followed the aggressive short term models would have traded only from the long side, as the index did not break below the 2720 level forecast (the day's low was registered at 2725.70). If you traded on the short side and if you lost money today, re-evaluate your trading strategy and take the revelations forward.

Short term models indicate scope for potential consolidation into another narrow range, towards the 2715-2725 band. Aggressive traders may want to use that band as a pivot to enter into long/short trades.

Exercise caution about potential sudden spikes up while selling short as S&P 500 is still in the bull territory - use tight stops and small profit-targets within this range.

MARKET ACTION TODAY - MON, 05/21 - THE WHAT, HOW AND WHY

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.

 

Bulls relaxed in their territory - no bears in sight...yet!

S&P 500 Market Minutes for today, Mon 5/21:

MARKET ACTION TODAY - THE WHAT:

The S&P 500 index opened the trading week on a positive note, up 12.98 points - riding on the back of easing U.S. and China trade tensions. Led by Industrials and Telecommunication Services sectors, today’s gains were broad based with all the11 primary sectors closing with gains. Maintaining the optimism throughout the session and trading within a narrow range (2,725.70 - 2,739.19), the index closed the trading session up by 20.04 points at 2,733.01, gaining 0.74%.

MARKET ACTION TODAY - THE HOW AND WHY:

To reduce its trade deficits with the U.S., the Chinese government agreed to increase their purchases of American goods and services including agricultural and energy products. In return, the U.S. postponed the implementation of tariffs on Chinese goods valuing up to $150 billion. Benefiting from the easing of trade tensions between U.S. and China, Industrial stocks received a major boost, gaining 1.54% led by a 3.61% in Boeing Co.

Telecommunication Services and Technology sectors with Chinese clients were also amongst the top gainers of the day, up 1.49% and 0.84% respectively, which were further boosted after Micron Technology Inc., raised its profit and revenue guidance for the third quarter. Energy stocks also traded higher supported by high oil prices. The 10-year Treasury bond yield inched lower supporting the day’s gains, settling at 3.06% albeit staying above the psychologically important 3% mark. 

While today’s rally was broad based driven by easing trade concerns, stocks of Steel companies fell on the assumption that the previously announced steel import tariffs by the Trump administration will be put on hold or cancelled. Steel stocks had been rallying after the announcement of a 25% tariff on steel imports. 

S&P 500 OUTLOOK AND TRADING PLAN FOR TOMORROW - TUE, 05/22:

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.

 

 

S&P 500 TRADING PLAN FOR MON, 05/21

Bears putting up a decent fight! Bulls still staying strong!

Medium-to-long term investors:

Those who followed the medium term models would still be holding their longs into Monday (survived, again, the take-profit stop at 2708 by just about one point). If long, keep your take-profit stop still at 2708 and be happy with the profit if it hits - if it does not hit, be happy knowing that it is accumulating more profits. Those who are not holding any positions might want to follow the caution already published: “...wait for a better re-entry opportunity instead of trying to chase the long trade or a prematurely short trade”. 
While today's - and, this week's - market action is a bit weak on the bulls' part, it does not damage the strong bullishness which unfolded last week. Hence, medium-term models currently indicate no short bias until all the way below 2680. Medium term indications are for a long bias above 2635, flat below 2610, and a short bias below 2680. 

Aggressive, short term, medium-frequency, or professional traders:

Those who followed the aggressive short term models would have gone short below 2720. By the very design, as a short term or medium-frequency trader, you would not be carrying any positions into the weekend, so you would have booked decent profits already and should be flat into the Monday's session. If not, re-consider how you think of your trading style.
Short term models indicate going short below 2720, flat between 2720 and 2735, and long above 2735. For short positions, use the 2705-2700 range as a pivot range to take profits and/or re-establish shorts. Exercise caution about potential sudden spikes up while short within 2700-2680 - use tight stops and small profit-targets within this range. 

Market Action, Fri, 05/18

S&P 500 Outlook for Mon, 05/21

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.