S&P 500 E-Mini: Bears Halting Buying Pressure
2024.07.16 11:33
S&P e-mini Pre-Open Market Analysis
- The formed a doji bar yesterday with a small bull body. Yesterday, it failed to break out above last Friday’s high and reversed down.
- The bears are doing a good job of halting the buying pressure and making the market go sideways.
- However, the bears only have one bear bar out of the past ten trading days. This is a sign of bullish strength and increases the odds of more sideways trading.
- The odds favor a test of the moving average, and every bar that gets added to the sideways trading is dragging the moving average up to the current price.
- The market can reach the moving average by going lower or sideways, which is what it is doing right now.
- The e-mini is climactic on the daily chart as well as in the higher time frames. This increases the odds of sideways to down over the next several months.
- The rally up in July is strong with several micro gaps. Strong rallies late in a bull channel is a buy climax that usually leads to exhaustion.
- This means that the expectation is a test of the bottom of the buy climax, the July low. However, it could take several weeks to get down to the July low.
- It is important to realize that selling below bars is unlikely at the moment. Even though the odds favor sideways to down, the bears still need to develop more selling pressure.
- Overall, the upside is probably limited for the next several weeks, and the market will probably go sideways down. The bears need to continue to develop more selling pressure.
What to Expect Today
- The Globex market sold off during the early morning hours and rallied back to nearly the 5,700 round number, where it will likely find resistance.
- At the time of writing this, the market is up 13 points (15 minutes before the U.S. Open).
- As always, traders should expect the open to have a lot of trading range price action. This means that most traders should wait for 6-12 bars before placing a trade unless they are able to make a quick decision.
- The market is going to open near the 5,700 round number, which has been an important magnet for the past couple of trading days.
- Because the daily chart is getting climactic at the 5,700-round number, today will probably disappoint the bulls. This means that today has the potential to become a bear trend day, or at least close below the open.
- The market may try to test yesterday’s high, and if it does, it will likely find sellers above it.
- Because bears want the market to close below the open of the day, traders should pay attention to them. If the market rallies on the open for a couple of legs and it looks like a bull leg in what will become a trading range, traders will expect a reversal back down to the open.
Yesterday’s E-mini 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 nearly 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 it.
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 E-mini.
