Stock market bears creating selling pressurePre-Open market analysis
The Emini yesterday reversed up from below Monday’s low. Yet, there were 3 consecutive bear days and 5 bear days in the past 6 days. Furthermore, the weekly chart is the most overbought in the history of the Emini. Therefore, the upside is probably small. In addition, the Emini has probably begun a 3 month correction down to below the May 18 low and below the weekly moving average. Hence, the Emini is likely to pullback about 100 points.
Because the monthly chart is in in a tight bull channel, bulls will probably buy the 3 month pullback. However, since the monthly chart has a parabolic wedge top, there is a 40% chance of a deeper pullback.
Overnight Emini Globex trading
The Emini is down 8 points on the Globex chart. Since the Emini is in a month-long trading range, the bulls will be disappointed by every rally. In addition, the bears will be disappointed by every selloff. Because most days have been trading range days and small reversal days over the past month, the odds are that today will be another.
Yet, the weekly chart is so extremely overbought. Hence, the odds are that there will be a swing down for the next couple of months. Furthermore, it might begin with one or two big bear trend days. There is therefore an increased chance of a couple big bear days within a couple of weeks.
Yesterday’s setups
