S&P E-mini pre-open market analysis- The E-mini S&P 500 futures may go sideways today after market rallied yesterday for the first couple of hours and then sold off in a strong small, pullback bear trend for the rest of the day.
- On the daily chart, the bulls used yesterday morning’s rally to sell out of longs at a higher price. The bears knew the odds favored a 2nd leg down after Wednesday’s outside down bar, so they also sold.
- There were trapped buy the close bulls who bought the breakout on March 21st, and they used yesterday’s rally to exit longs back at the March 21st bull close.
- While yesterday is a follow-through for the bears, it is more of a trading range bar, a reminder that the bear case is not as strong as it could be.
- The bears still expect a 2nd leg down from the March 22nd outside down bar.
- The bulls know that the bears will likely get at least a small 2nd leg down, and they do not mind it as long as the market forms some kind of higher low and least to an upside breakout above the March 22nd high.
- For the bulls to set up a reasonable buy, they will likely need some micro double bottom at a minimum to convince traders to buy.
- Overall, traders should expect the first reversal up to fail and lead to sideways trading and the bears to get a small 2nd leg down. However, the market may have to go sideways for a couple of days first before the bears can get their 2nd leg down.
E-mini 5-minute chart and what to expect today
- E-mini is down 22 points in the overnight Globex session.
- The overnight Globex session has been in a bear trend since the early morning hours.
- The bears want the market to have a follow-through today and close below the past two days.
- Today will gap down, which means traders should expect at least a small 2nd leg down on the open.
- However, traders should also expect to enter an early trading range and go sideways to the moving average.
- Most traders should wait for a swing trade to set up, that usually forms before the end of the 2nd hour. The swing trade usually begins after the formation of a double top/bottom or a wedge top/bottom.
- Today is Friday, so weekly support and resistance are essential. This means that traders should be prepared for a surprise breakout late in the day as the market decides on the close of the weekly chart.
Yesterday’s E-mini setups
Disclosure:
Here are several reasonable stop-entry setups from yesterday. I show each buy entry with a green rectangle and each sell entry with a red rectangle.
My goal with these charts is to present an Always In perspective. If a trader was trying to be Always In or nearly Always In a position all day, and he was not currently in the market, these entries would be logical times for him to enter. These, therefore, are swing entries.
It is important to understand that most swing setups do not lead to swing trades. As soon as traders are disappointed, many exit. Those who exit prefer to get out with a small profit (scalp), but often have to exit with a small loss.
If the risk is too big for your account, you should wait for trades with less risk or trade an alternative market like the Micro E-mini.