Stock Markets Analysis & Opinion

S&P E-Mini Bears Want Second Leg Down

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Emini daily chart

  •  The S&P 500 Futures formed a strong bear breakout last Friday and yesterday was disappointing follow-through selling for the bears. The bears are hopeful that last Friday is the start of a second leg down based on the selloff that ended on September 9th.
  •  The bulls want to prevent the bears from getting a second leg down after last Friday’s big bear breakout bar.
  • While the bulls did a good job disappointing the bears yesterday, there is no strong buy signal bar above it. This means there are probably sellers above yesterday’s high if we go above it.
  •  While the market is in an overall trading range and traders should expect the bears to become disappointed, traders should be open to the possibility of the bear getting at least a small 2nd leg down after last Friday’s bear breakout bar.
  •  If the bulls create a double bottom with the September 9th low, they must create more buying pressure.

Emini 5-minute chart and what to expect today

  • Emini is down 12 points in the overnight Globex session.
  • The Globex market recently sold off following the 8:30 AM ET report. The bears are hopeful they will be able to get a breakout below the past two trading days and a bear trend today.
  • Traders will pay close attention to see if the bears can develop a bear trend from the open.
  • While there is an 80% chance of a trading range open and only a 20% chance of a bear trend from the open, traders should respect the possibility of a trend from the open.
  • It is common for trend days to open and appear like a leg in a trading range that begins to form gaps. Traders should be mindful of this today if the bears can form this on the open.
  • As always, traders should expect a trading range open and consider not trading for the first 6-12 bars unless they are comfortable with limit orders.

Yesterday’s Emini setups

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