Pre-Open Market Analysis
Yesterday closed near its high. It is a buy signal bar on the daily chart for a micro double bottom in a bull trend. I wrote this week that the Emini S&P 500 might have to test 3300 before a 2nd leg down begins. That is more likely after yesterday’s reversal up. The Emini is back to almost neutral. There is is now almost a 50% chance of a new high before there is a 5% correction.
The bulls want a double top bear flag with Wednesday’s high or a Low 2 bear flag. If instead the bulls get another one or two more bull bars, the Emini will probably test the all-time high.
Monthly Candlestick Closes Today
I have been saying for the past week that the open of the month would be a magnet at the end of the month. Today twice reversed up strongly from below the open of the month. It now is in the middle of the month’s range.A close below the midpoint would mean that January would be a reversal bar. But if it has a bull body, which is likely, it would be a weak sell signal bar. We already know that the context is bad for the bears on the monthly chart. The best they probably can get is a 1 – 2 month pullback.Can it still close below the open of the month? It would then have a bear body and January would then be a sell signal bar on the monthly chart. While this is still possible, yesterday’s late strong rally make it unlikely.
Overnight Emini Globex trading
The Emini is down 13 points in the Globex session. It has been sideways for 4 days and it is now at the top of the small trading range. The range has a double bottom.
While the bulls hope that yesterday’s rally from the double bottom will continue to a new all-time high, the bears want it to fail around Wednesday’s high. They want a reversal down from a small double top and for this week’s selloff to continue down for at least 5%. Traders will find out over the next few days which outcome will be more likely.
Because yesterday’s rally was climactic, there should be some profit-taking today. Traders typically expect at least a couple hours of sideways to down trading beginning by the end of the 2nd hour. If often begins on the open. There is only a 25% chance of a strong bull trend day from the open that lasts all day.
Monthly and weekly support and resistance can be important today since today is Friday and the last day of the month. The most important magnets are the month’s open, high and midpoint.
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. Buyers of the Brooks Trading Course and Encyclopedia of Chart Patterns have access to a much more detailed explanation of the swing trades for each day.
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.