S&P Emini market analysis

Emini daily chart

• The Emini is in a tight trading range on the daily chart and, therefore, a neutral market. Traders should assume that the probability is close to 50% of a directional breakout up or down.

• The probability slightly favors the bulls because the market is in a bull channel, holding above the moving average.

• The longer the market goes sideways and builds in selling pressure, the greater the risk of a downside breakout below the moving average and a test of the November 15 ^th most recent major higher low.

• While the bears have done a good job of making the market go sideways, they need to do more. Ideally, the bears need a series of bear bars closing below the moving average for traders to conclude the market is Always In Short.
  

Emini 5-minute chart and what to expect today

• The Emini gapped down on the open and formed a bull reversal bar on bar 3.

• While the gap down is good for the bears, the context is not ideal. The Gap down is near the bottom 1/3 ^rd of the trading range on the daily chart, and the 15-minute Globex chart finds support around the day open.

• The bulls hope that the bull trend from the open will last all day. They need more follow-through buying to reassure traders that the rally will last several hours.

• Bar 5 is a strong enough rally that the odds favor a 2 ^nd leg up and buyers below.

• At the moment, the market is buy the close for a second leg up.

• Because of the buying pressure on the open, today will likely be a bull trend or a trading range day, not a bear trend day.

• The bull should not have allowed bar 6 to form. This is a disappointment, following the overlap on bars 5-6. This increases the odds of a trading range open.

  Yesterday’s Emini setups