Pre-Open Market Analysis
Yesterday traded below Friday’s low and then above Friday’s high. It was therefore an outside up day. The Emini S&P 500 then entered a tight trading range, as it usually does once it goes outside up. The bulls got trend resumption up and the Emini closed at a new all-time high. There is no top and traders expect higher prices.
But, it is important to understand that the Emini might be in a trading range on the daily chart that began with the start of 2020. The current rally would then be a bull leg in a trading range rather than a resumption of the bull trend.
If so, a bear leg will follow. A reversal down would probably test the January low within a month or two. If there is a reversal, traders will be back to wondering if it will lead to a 5 – 10% correction.
Overnight Emini Globex Trading
The Emini is up 10 points in the Globex session. It might therefore gap above yesterday’s high.Yesterday was a big day and the Emini might be in a trading range since Christmas. If it is, today will probably be a bad follow-through day for the bulls. That means a small day or even a bear day.This is important. If there is no follow-through buying today, it would increase the chance that the 2-week rally is just a bull leg in a trading range that began around Christmas. But if today is another big bull day, it will make traders expect a measured move up based on the high of the January range.The January selloff was strong enough to make a trading range slightly more likely. Consequently, today will probably not be another big bull day.
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.