S&P E-Mini: Continued Disappointment for Bulls and Bears


Emini daily chart

  • The S&P 500 Futures sold off late in the day yesterday, preventing the bulls from getting a bull bar closing on its high. Likely Emini continued disappointment for both bulls and bears.
  • The market has had a lot of overlap since April 4th. This increases the risk that the market is evolving into a trading range.
  • The 20-period Exponential Moving Average is around 4,115, close enough for the market to touch it.
  • Yesterday’s close is in the middle of two important price levels, the March 22nd high and the February 2nd high.
  • Typically, when the market is going sideways and in the middle of two important price levels, it is a clear sign of trading range price action.
  • This means that the market is deciding on which target to test (March 22nd or February 2nd high), and traders should assume the probability is very close to neutral.
  • The bulls probably still have a slight advantage since the channel up from the March low is tight. However, the probability is not 60% for the bulls.
  • While the bears had done an excellent job, they have not taken control of the market. The bears have done enough to make the bull breakout up to April 4th convert into a trading range.
  • The bears now need to increase the selling pressure if they are going to get a downside breakout and close below the March 22nd high.
  • The reason March 22nd high is important because it is a big bear bar, and it was a possible lower high in the bear channel.
  • The bears that sold the March 22nd high never got a chance to exit without a loss. Typically, when the market is in a trading range, it will allow traders who bet against breakouts (sell above bars or buy below bars) to use wide stops and scale in to make a profit or at least avoid a loss.
  • Overall, traders should expect continued disappointment and confusion for the bulls and the bears. There are probably buyers below and sellers above yesterday’s bar.

Emini 5-minute chart and what to expect today

  • Emini is up 1 point in the overnight Globex session.
  • The Globex market has been in a trading range for the overnight session.
  • At the moment, the market will probably open near yesterday’s close.
  • Traders should expect a trading range open during the U.S. Session.
  • As I often say, most traders should wait for 6-12 bars before placing a trade. Waiting for 6-12 bars gives a trader information on how the day will likely unfold.
  • On the open, there is a 50% chance that the initial move reverses and an 80% chance that the initial move has at least a minor reversal.
  • Today is Friday, so weekly support and resistance are important. The open of the week is 4,161, which will be magnet today.
  • Traders should be prepared for a possible surprise breakout late in the day due to traders deciding on the close of the weekly chart.
  • Lastly, traders should be open to anything. It is important to become comfortable changing your opinion about the market once you conclude your premise has changed.

Yesterday’s Emini setups

SP500-Emini-5-Min Chart


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