S&P 500 E-Mini: Profit Taking Likely

S&P Emini pre-open market analysis

o    The S&P 500 Futures is beginning to go sideways after the recent strong upside reversal from the October 27^th high. The odds are that the bulls will begin to take partial profits, increasing the odds of going sideways over the next few days.

o    The bears are hopeful that the market will begin to go sideways and that the bulls will take partial profits near the October 17^th high.

o    There are trapped bears who sold the rally up from the October 27^th low, and they will likely use any pullback they can to buy back shorts with a smaller loss. This increases the odds of buyers below and a second leg up for the bulls.

o    Because the market is in an overall trading range on the daily chart, it may have to pull back near a 50% retracement of the October 27^th rally before the bulls come in.

o    Overall, today will probably disappoint the bulls and the market will continue to go sideways within the four-day tight trading range.

Emini Price Chart

o    The Globex market has gone sideways in a tight trading range on the 60-minute chart for most of the overnight session.

o    The bears are trying to form a large wedge top on the 5-minute Globex chart, going into the open of the U.S.  Session.

o    The bears want today to be a bear bar on the daily chart. This means they will try their best to close far below the day’s open.

o    Traders should pay close attention to the open since it will probably be a magnet today.

o    As always, traders should consider not trading the first 6-12 bars unless they can make quick decisions. If they do trade the open, they should consider waiting for strong consecutive closes.

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.