S&P 500 E-Mini Bulls Eye 2nd Leg Up

Emini daily chart

• The S&P 500 Futures formed a bull follow-through bar after last Friday’s upside breakout of the tight trading range. The Bulls want continued buying and a 2nd leg up after last Friday.
• However, yesterday’s follow-through bar is disappointing. It would have been better for the bulls if the market closed far above last Friday’s high.
• While the market is still Always In long and the odds favor a second leg up from the rally up to the October 27^th high, yesterday increases the odds of a pullback.
• Even if the odds pull back to around the 4,300 price level, there are still probably buyers not far below. This is due to the bears trapped into a losing short position and the bulls trapped out of a strong upside breakout.
• Overall, the bulls want to prevent a deep pullback. This will force the bears to cover their positions with a larger loss and force the bulls trapped out of the market to buy at a higher price.  The odds still favor a second leg up and test of the September 1st start of the bear channel.

Emini 5-minute chart and what to expect today

• Traders should expect a lot of trading range price action, especially during the first hour of the U.S. Open. This means that most traders should consider not trading for the first 6-12 bars unless they are comfortable with limit orders and scalping.
•  Most traders should try and catch the opening swing that often begins before the end of the second hour.  It is common for the market to form a double bottom/top, or a wedge bottom/top.
• Traders should pay close attention to the open of the day as it will likely be a magnet for most of the day as bulls and bears fight for control.
•  Lastly, traders must be open to any possibility and never deny the price action in front of them.

S&P 500 Emini Chart

Yesterday’s Emini setups

Here are reasonable stop entry setups from yesterday. 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.