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

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 OUTLOOK FOR MON, 05/21

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

As alluded to in the forecast headline for Friday, the bears indeed put up a fight into the weekend and pulled the index down a bit more, albeit in a small way. Astute readers have picked up and excitedly pointed out to me the following from the forecast for Friday, published Thursday night: 

(i) "Tomorrow being Friday, volatility could pick up. Models indicate potential choppy trade within a narrow range of 2710-2730." - the index did trade well within this range, registering the day's low at 2709.18, less than one point from the forecast 2710 level.
(ii) "...use 2720 as a pivot to determine the direction of the trade - long above 2720, and short below 2720" - the index actually registered the day's high at 2719.50 - just half-a-point below the short-term, aggressive model's forecast cutoff to go short! Traders who followed this strategy would have made decent profits today! Congratulations on a disciplined trading!

While I am thankful for such kind notes, I wanted to reiterate this: The kind of performance from my forecast models today and yesterday might strike one as magically (or, spookily) accurate (observing at least two such days just this week alone), it is worth reiterating that quantitative models do NOT consistently work like this - a string of horribly missed forecasts could be just waiting in the wings. Do NOT use my forecasts here (or anyone's) - no matter the past performance - to place trades blindly or over-aggressively.
The most important parameters you need to use in your investment/trading decisions are: your own individual financial situations and your own risk tolerance. Always trade within your risk parameters and do NOT place all-in kind of trades - if done so, it becomes "gambling" and gambling is one sure way to lose all your wealth very fast. Always trade with disciplined risk management rules and using valuable tools to lower "such risk of ruin" and to increase your probability of success.
Happy and safe investing/trading! 


TRADING PLAN FOR MON, 05/21

MARKET MINUTES, FRI, 05/18

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 MARKET ACTION - FRI, 05/18

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

The S&P 500 index traded lower during Friday’s session as a slight pullback in Treasury yields and oil prices weighed down on Financials and Energy sectors, overshadowing gains in Industrial and Health-care sectors. Conflicting news headlines around U.S. – China trade talks further weighed down on investor sentiments. Holding on to the 2,710 support level (at 100 DMA) for the third day in a row and bouncing off it after reaching the day’s low at 2,709.18, the index ended a choppy week at 2,712.97 down 7.16%, losing 0.26% and with a weekly loss of 0.54%.

Disappointing earnings guidance reported by Campbell Soup Co., Nordstrom Inc. and Applied Materials Inc. at the tail-end of this earnings season weighed down on Semiconductors and Consumer Discretionary sectors as they continue to remain under pressure due to rising input costs. The agricultural and construction equipment maker, Deere & Co. gained 5.75% after reporting an expected growth of 35% in equipment sales for the third quarter, lifting the broader Industrials sector by 0.55% to be the best performer in the index.

Energy stocks shed gains (losing 0.81%) as oil retreated after reaching the $80 price mark for the first time since November 2014. Financial stocks also shed some of their last week’s gains as the 10-year Treasury yields inched lower to settle at 3.059% after reaching the seven-year high of 3.11% in Thursday trading session.

Chinese officials denied Thursday’s news reported by several news outlets that China has offered to reduce its trade deficit with the U.S. by up to $200 billion. Meanwhile, Congress officials planned to push forward a bill that could block deals between American and Chinese companies that pose a risk to national security. Gains in the equity markets remained capped as investors dealt with the conflicting news headlines around latest developments in the U.S. – China trade talks.

S&P 500 Outlook for MON, 05/21

TRADING PLAN FOR MON, 05/21