I will update around 6:55 a.m.
A popular version of the January barometer uses the 1st 5 days of the year. If they are up, the rally increases the odds that the year will be up. However, most years are up anyway. This is because all financial markets have been in bull trends on the yearly charts forever. The January barometer does not help traders make money. Traders talk about it for entertainment only.
Whenever the strongest leg of a bull trend comes late in the trend, it is more likely an exhaustive buy climax than the start of an even stronger leg up. While last week was strongly bullish, it was extreme on the daily and weekly charts. Hence, there is a risk that last week was the start of a blow-off top.The odds therefore favor some sideways trading early this week. While the bulls might get a brief 2nd leg up after a 1 – 3 day pullback, the odds are that the Emini will begin to test down to last week’s low within a couple of weeks.
Once there, the bulls will try to rally again. Yet, the bears will look for a reversal below last week’s low In addition, they want a measured move down based on the height of last week’s rally.
The Emini is down 3 points in the Globex session. Since last week’s rally was exceptionally strong, the odds favor at least a micro double top before there is a reversal down. If today is the start of a selloff, the selloff will probably end within a few days. Then, the odds favor a 1 – 3 day rally. If the bears get a reversal down, they would have a micro double top after a buy climax. The odds would favor a test down to last week’s low over the following couple of weeks.
Here are several reasonable stop entry setups from Friday. I sometimes also show limit order entries and entries on the close of bars.
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