S&P 500 cash index closed at new high

Pre-Open market analysis

The S&P 500 cash index has poked above the all-time highest close several times over the past week. Because it was hanging just below that resistance instead of reversing down, I have been saying that the bulls would not consider taking profits until after a new closing high. They got their new closing high yesterday.

The reason why they will likely begin to take some profits before the end of the month is that the Emini had a streak of 9 consecutive bull days that ended last week. That is extreme and the Emini should retrace down to the start of that streak at a minimum. That means a test of 3200.

But the 2 prior similar streaks led to about 10% corrections. Consequently, the profit taking might continue down to around the 3000 Big Round Number.

Might get outside down and an oo pattern

Yesterday was an outside up day at a price where traders are looking for either a breakout or a reversal. Since yesterday’s range was not big, there is an increased chance of today trading above yesterday’s high and then trending down to below yesterday’s low.

That would create an oo pattern (consecutive outside bars), which is a Breakout Mode setup. Today would be both a buy and a sell signal bar for tomorrow.

Overnight Emini Globex trading

The Emini is up 2 points in the Globex session. The bulls want a gap up and at test of the 3400 Big Round Number. They know that the cash index is at a price where it might reverse. They therefore want a big bull day closing on its high. That would increase the chance of follow-through buying over the next few days.

The bears want today to be a sell signal bar. For example, it could trade above yesterday’s high and close near its low, it could be an inside bar closing near its low, or it could be an outside down bar, especially if it closed near its low and below yesterday’s low.

What is most likely? The Emini has had a lot of trading range days around the February high. It is therefore likely that today will again have at least one swing up and one swing down. Also, it could be another small day like Monday. This could create an ioi (inside-outside-inside) Breakout Mode pattern for tomorrow.

Yesterday’s setups

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. I rarely also show limit order entries and entries on the close of bars. I do not want the lines to be distracting. If they are longer, I make them dotted. But, they have to be visible, so I make the shorter ones solid. Buyers of the Brooks Trading Course and Encyclopedia of Chart Patterns have access to a much more detailed explanation of the swing trades for each day (see Online Course/BTC Daily Setups).

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.

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 Emini.