Pre-Open Market Analysis
The Emini has a buy climax on the daily and weekly charts. But, a climax can continue to rally far longer than what might seem likely. For example, the bulls could finally get a strong breakout above 2,800.
More likely, the bulls will begin to take profits this week or next. That will probably result in a 2 – 3 week pullback.
The stock market has had 8 consecutive bull bars on the weekly chart with a 10% rally many times over the past 100 years. Two thirds of the time, the market was down an average of 2% within the next month.
There is no reliable top yet on the daily chart. Yesterday had a bull body and therefore is a low probability sell signal bar. However, the risk of a big move up or down is growing. While most days continue to have trading range price action, day traders have to be ready for the 5 minute chart to begin to form trend days.
Overnight Emini Globex Trading
The Emini rallied to within 2 points of 2,800 overnight and then sold off. That has been major resistance for over a year. The Emini is now down 6 points in the Globex session.
The bulls know that many bears will exit their shorts above the triple top on the daily chart. If the bulls can break above, they might get a sharp rally to a new all-time high within weeks.
They know this is unlikely. However, they keep buying until they believe they will fail. If they conclude that they cannot achieve their goal, instead of a sharp rally from bears giving up, there could be a sharp selloff from bulls giving up. There is therefore an increased chance of several strong days up or down beginning within a couple weeks. Until then, day traders will continue to look for 2 – 3 hours swings up and down.
Yesterday’s Setups
Here are several reasonable stop entry setups from yesterday. I show each buy entry with a green rectangle and each sell entry with a red rectangle. I rarely also show limit order entries and entries on the close of bars. 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.