S&P 500 E-Mini Bulls Likely to Be Disappoint
2023.09.05 10:54
S&P Emini Pre-Open Market Analysis
- The Emini formed a strong bull breakout last week. However, the breakout is in the middle of an overall trading range. This increases the odds of the bulls becoming disappointed and the market going sideways.
- While the bulls will likely get a second leg up after the August 30th bull breakout with follow-through, the second leg will probably be disappointing and not go that far up.
- The bears did a good job creating overlapping bars over the past three trading days. However, if the bears take control, they need to create more selling pressure.
- The bears have not made money on a stop-entry in several bars, a sign of strong buying pressure. This may limit the amount of bears selling below bars until they see more signs of bearish strength.
- The bulls want to prevent the bears from making money below bars with stop orders because more traders will consider the possibility of a small pullback bull rally.
- More likely, last week’s rally will act as a 2nd leg trap and lead to sideways trading.
- Overall, the bears must do more to convince traders that the bulls are losing control. This means that there are probably buyers below. However, as stated earlier, the risk the bulls face is getting trapped buying high in a trading range.
Emini 5-minute chart and what to expect today
- Emini is down 10 points in the overnight Globex session.
- The overnight Globex market has gone sideways for the past several hours.
- Traders should assume that today will have a lot of trading range price action.
- Most traders should assume that the first 6-12 bars will have a lot of overlapping bars. This means there is likely no rush to trade the first 6-12 bars.
- There is an 80% chance of a trading range open and only a 20% chance of a trend from the open on the first bar of the day where bar 1 is either the high or the low.
- Likely, magnets today will be last Friday’s low and the day’s open.
- The most important thing on the open is remembering, as Al Brooks says, “Price is truth.” One must never be in denial of the chart in front of them. While a trading range is most likely, if the market starts to trend, traders must find ways to enter the trend’s direction.
Friday’s Emini setups
S&P 500 Emini 5-Minute-Chart
Here are several reasonable stop-entry setups from Friday (before market break). I show each buy entry with a green rectangle and each sell entry with a red rectangle. 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.
