October Correction But No Crash
Pre-Open Market Analysis
The Emini finally reached the open of the month. Because the monthly chart closes tomorrow, monthly support and resistance are important. As a result of the Emini never having 8 consecutive bull-trend bars on the monthly chart, this month’s open is especially important. If Friday closes above the open of the month, it would be the 1st time in the 18-year history of the Emini that it has ever done so.
Furthermore, a 9th consecutive bull trend bar would be even more rare. Hence if September is a bull-trend bar, there probably is an 80% chance that October will have a bear body. Therefore, it is a high probability trade to look for shorts in October. They will do so whenever the Emini is above next Monday’s open, which is the open of October.
Since the Emini stalled yesterday once it reached the September open, the Emini is paying attention to that price. The odds are that the Emini will stay within about 10 points of the September open for the rest of the week. Then, in the final minutes of the week, we will find out it September is a bull or bear bar on the monthly chart.
100-Point Pullback In October
While there has never been 8 consecutive bull trend bars on the monthly chart, there have been many instances of 7. Most noteworthy is that each soon led to a 100 point pullback. The odds are therefore high that there will be a 100 point pullback in October or November.
Overnight Emini Globex
For the past month, I have talked about the importance of the open of the month and how it would be a magnet at the end of the month. Tomorrow is the end of the month, and the Emini reached the target yesterday. Because it did not break strongly above or reverse strongly down, the odds are that it will oscillate around it until the final minutes tomorrow. As a result, traders will not know if September will be the 8th consecutive bull trend bar on the monthly chart until the end of the month. Since the Emini will probably be unable to break free of the magnet until possibly the final hour tomorrow, the odds are that today and tomorrow will be mostly in trading ranges.