E-Mini Becoming Climactic: Pullback Likely

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S&P Emini pre-open market analysis

Emini daily chart

• Yesterday’s S&P 500 Futures bull breakout on the daily chart was climactic, increasing the odds of a pullback lasting a day or two.
• Typically, a bigger bull bar late in a breakout will attract profit-taking as traders see the bigger bar as a gift and a brief opportunity to take profits at an advantageous price.
• Climactic bars like yesterday typically lead to sideways trading and not a reversal. This means that the best the bears can expect is a brief pullback of the bull rally that began back on July 10th.
• The Emini is getting close to 4,600, and it may have to reach it. Today’s opening session may test 4,600 and form an opening reversal down, leading to a bear bar on the daily chart.
• The April 21st high (4,637.25) is close enough for the market to reach it before bears can take control. However, the market will probably have to get at least a brief pullback first.
• Overall, traders should expect a brief pullback lasting one to two bars soon. Traders will measure the strength of the pullback; if the bears appear weak, bulls will buy, leading to a second leg up.

Emini 5-minute chart and what to expect today

• Emini is up10 points in the overnight Globex session.
• The overnight Globex market has gone sideways in a tight trading range following yesterday’s strong bull rally.
• Since yesterday was so climactic, there is a 75% chance that the market will have two hours of sideways trading beginning before the end of the second hour.
• There is a 50% chance of follow-through buying on the open. If this happens, there is still a 75% chance of sideways trading beginning before the end of the second hour.
• The 4,600 big round number is not far away, and the market may have to reach it before the trading range begins.
• Traders should expect the bulls to probably be disappointed on the daily chart, which means today will likely be a bull trend or a trading range day.
• The open will probably have a lot of trading range price action. Generally, most traders should consider waiting 6-12 bars before placing a trade unless they are comfortable making quick decisions. This is especially true since there is a 75% chance of two hours of sideways trading today beginning before the end of the second hour.
• Lastly, traders should pay close attention to the open of the day as it will likely be an important price level.

Yesterday’s Emini setups

SP500 Emini 5-Min-Chart

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