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S&P 500 E-Mini Stalls Below Oct 3 Low: What Comes Next?

Published 10/31/2023, 09:33 AM
ESU24
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S&P Emini Pre-Open Market Analysis
  • The S&P Emini is stalling and will probably test the October 3rd breakout point low in the next few days.
  • The bulls have been making money below bars, so buyers are probably below.
  • The market is near several support layers, such as the midpoint (4,172) of the rally that began in October 2022.
  • Traders will pay close attention to how the market will react to the October 3rd low. The Bulls are hopeful that they will be able to get a strong bull close above the October 3rd low. This would increase the odds of higher prices and a test back to 4,300.
  • The bulls want to get above the October high, the most recent major swing high. This would end the argument of a bear trend since the market would no longer be forming trending lower highs.
  • The bears want the opposite of the bulls. The bears will try their best to keep the October 3rd breakout point low open, leading to a measured move down.
  • The bears need to prevent the bulls from getting a strong reversal. This means the bears need to form something like a Low 2 short, leading to a downside breakout.
  • Overall, the Emini will probably rally above the October 3rd breakout point low over the next couple of days, which would disappoint the bears.

What to Expect Today

  • The Emini is continuing the rally that began during yesterday’s Globex session.
  • The bulls will try and get follow-through buying, increasing the odds of a test of the October 3rd low.
  • Traders should expect a lot of trading range price action on the open. As I often say, there is an 80% chance of a trading range open and only a 20% chance of a trend from the open.
  • This means that traders should expect a trading range open and consider not trading the first 6-12 bars.
  • Most traders should try and catch the opening swing that often begins before the end of the second hour, after the formation of a double top/bottom or a wedge top/bottom.
  • Traders should pay attention to the open of the day, as well as yesterday’s high. Both will likely be essential magnets today.

Yesterday’s Emini SetupsEmini 5-Minute Chart

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 the 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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