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S&P 500 E-Mini Approaching 5,300 Round Number - Can It Break Above?

Published 05/13/2024, 09:44 AM

S&P Emini Pre-Open Market Analysis
  • The S&P 500 Emini is getting near the 5,300 round number and will probably reach it over the next few days.
  • The bears do not mind if the market reaches the 5,300 round number as long as they can form a successful major trend reversal and a downside test of the April 19th low.
  • Next, the bears will try to get a successful break below the April 19th neckline and measured move down of the (March 21st high to the April 19th low), which projects down to below 4,700.
  • Without stronger selling pressure, a test of 4,700 is not likely anytime soon.
  • The rally up to the May high is tight, and the odds favor higher prices.
  • It is important to realize that a trading range is most likely. This means that the market will likely begin to go sideways soon.
  • The bulls have a measured move target of 5,317.25 from the bear flag (April 19th low to the April 29th high). They will likely reach this target soon.
  • Since the market is in a trading range, traders will expect a test of the April 29th breakout point over the next several weeks and for the market to close the breakout point.
  • Overall, the market is Always In Long within an overall trading range. The bears need to do more to make the market Always In Short.
  • It is important to realize that an Always In Long market within a trading range vs a trend are two different things.
  • When a market becomes clearly bullish within a trading range, the upside is usually limited, and the market often gets a deep pullback soon. This means traders should expect the bulls to become disappointed this week by sideways trading or a deep pullback.
  • Overall, traders should expect the market to get closer to the 5,300 round number. However, the bulls will probably be disappointed soon since the market is in a trading range.

What to Expect Today

  • Emini is up 16 points in the overnight Globex session.
  • The Globex market on the 15-minute chart has been in a tight bull channel, with most closes above the 20-period moving average.
  • This increases the odds of sideways to up trading without more selling pressure.
  • The bulls recently formed an upside outside up bar at 9:15 AM EST. This increases the odds of sideways trading for the next several bars.
  • Outside bars are expanding triangles (trading range) on smaller time frames. This increases the odds of sideways trading for at least 1-3 bars.
  • The market may have to test sideways to down on the open of the U.S. Session.
  • This means that the upside on the open is likely limited. Traders will pay attention to see what kind of selling pressure the bears can create.
  • There is an 80% chance of a trading range open and only a 20% chance of a trend from the open.
  • Traders should be patient on the open and consider waiting for 6-12 bars. This is because of the 80% probability of trading range stated above.

Friday’s Emini Setups

S&P 500 Emini 5-Minute Chart

Here are reasonable stop-entry setups from Friday. I show each buy entry bar with a green arrow and each sell entry bar with a red arrow. Buyers of both the Brooks Trading Course and Encyclopedia of Chart Patterns have access to a near 4-year library of more detailed explanations of swing trade setups (see Online Course/BTC Daily Setups). Encyclopedia members get current daily charts added to Encyclopedia.

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 Emini.

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