S&P 500 E-Mini Strong Bull Breakout

S&P Emini pre-open market analysis

Emini daily chart

• o    The Emini formed a strong bull breakout yesterday, following the release of the CPI report.
• o    Yesterday’s breakout bar is climactic, which increases the odds of profit-taking and a pullback lasting 1-3 bars.
• o    As I said over the past few weeks, the odds favored a 2^nd leg up after the rally that began on October 27^th.  
• o    The market will probably get to the September 1^st high, which is the start of the bear channel that ended at the October low.
• o    The rally up from the October low is tight. If the bears will get a reversal of the current rally, they must halt the buying pressure first. Until then, the odds will favor sideways to up.
• o    Overall, traders expect higher prices and a test of the September 1^st high. However, the market may have to pull back and go sideways for a few days first.
  
  

Emini 5-minute chart and what to expect today

• o    Emini is up 9 points in the overnight Globex session.
• o    The has been going sideways to up in a bull channel for most of the overnight session.
• o    The bears recently formed a downside breakout, and the odds will favor a second leg down, which is, as of 9:15 AM EST, the bears are attempting to get.
• o    Traders should expect the open to have a lot of trading range price action. Most traders should consider not trading for the first 6-12 bars unless they are comfortable with wide stops and limit order trades.
• o    Most traders should focus on catching the opening swing that often begins before the end of the second hour. It is common for the opening swing to begin after the formation of a double top/bottom or a wedge top/bottom. 
• o    Traders should pay attention to yesterday’s close as it will likely be an important magnet.
  
  

Yesterday’s Emini 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 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 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.