Trading Update: Tuesday January 6, 2026
S&P E-mini market analysis
E-mini daily chart
- Yesterday formed a bull bar, closing below its midpoint on the daily chart. This is another trading range bar inside of a trading range that has been contracting for several months.
- At the moment, the odds are the market’s going to have to reach the October 29th all-time high in the 7,000 round number.
- Traders interested in selling understand this, and there is an increased risk that those traders will not be interested in selling until the market reaches the two magnets mentioned above.
- While the market may break far above the all-time high, more likely it will be traders not far above it.
- The bears want to prevent the bulls from getting a strong breakout with follow-through above the trading range. They are hopeful that the market will quickly form a bear reversal bar after breaking above the all-time high.
- If the bears can form a strong reversal bar closing on its low, that would increase the probability that it was a failed breakout, and the market will test down and possibly back to the bottom of the range, which was the late November sell-off.
- Currently, it’s difficult for traders to do much of anything on the daily chart.
- The odds favor the market reaching 7,000 in the all-time high. However, that’s less than 50 points from where the current market price is. This makes it difficult for traders to buy. The risk is relatively large, and the profit potential is small.
- If Bayer is interested in selling, they’re selling just under an important magnet. Therefore, the odds are that the market will probably go against them and reach the magnet of the all-time high.
- Because of this, most traders are better off waiting to see what the test of the all-time high looks like.
E-mini 5-minute chart and what to expect today
- Today gapped up on the open and formed a bull trend from the open with bar 3.
- The market rallied from Bar 3 all the way to Bar 12.
- However, it ended up forming a parabolic wedge, and yesterday’s buy signal bar on the daily chart was weak. Increasing the odds of sellers above yesterday’s bar at 29 high.
- This caused traders to sell above the 29 high from yesterday and scale in higher. Those traders were able to make money as the market went far beyond yesterday’s low on the sell-off, down to bar 20.
- While the rally up to bar 12 was good for the bulls, generally on the open, there’s a 50% chance that the initial rally is in the wrong direction. This can lead to a deep pullback, which is what happened on bar 20.
- There’s at least an 80% chance that any rally or sell-off on the open is going to get a minor reversal. Both of these reasons damage the probability of traders buying above the 11 high.
- While the sell-off down to 19 was good for the bears, the opening rally was strong. This increased the odds of traders buying the rally and scaling in lower on the pullback to bar 19, making money.
- This meant that traders selling around the 19th close were selling in a location that was rather dangerous for the bears. Once the market went sideways, bars 20 to 28, more and more bulls started buying, which increased the odds of the market getting a reversal up and testing back to the high of the day.
- The bulls have done a good job with the rally from the 27 low to the 42 high. However, it is still following the strong sell-off to bar 19, and that increases the risk that there might be more traders selling above the 12 high, especially if the market starts to go sideways for an extended period of time and develops more selling pressure.
- This increases the risk that the market gets a deep pullback, possibly testing the mid-point from the low of bar 20 to the high of bar 38
- Overall, today is likely to have a lot of trading range price action. The bulls are hoping that today will be a bull trend day, but with the sell-off from the 12 high to the 19 low, that lowers the probability.
Yesterday’s E-mini setups
Richard created the SP500 E-mini chart.
Here are reasonable stop entry setups from yesterday. Chart shows each buy entry bar with a green arrow and each sell entry bar with a red arrow. Buyers of the Brooks Trading Course have access to a near 4-year library of detailed explanations of swing trade setups (see Online Course/BTC Daily Setups) linked to the Brooks Encyclopedia of Chart Patterns product.
The goal with these charts is to present an Always In perspective. If a trader was trying to be Always In or nearly Always In a position all day, and he was not currently in the market, these entries would be logical times for him to enter. These therefore are swing entries.
It is important to understand that most swing setups do not lead to swing trades. As soon as traders are disappointed, many exit. Those who exit prefer to get out with a small profit (scalp), but often have to exit with a small loss.
If the risk is too big for your account, you should wait for trades with less risk or trade an alternative market like the Micro E-mini.
Summary of today’s S&P E-mini price action
Richard created the SP500 E-mini chart.
E-mini end of day video review
Periodic end of day review videos will be moved to top of page when done.
See the weekly update for a discussion of the price action on the weekly chart and for what to expect going into next week.
Trading Room
Al Brooks and other presenters talk about the detailed E-mini price action real-time each day in the Brooks Trading Course trading room. We offer a 2 day free trial.
Charts use Pacific Time
When times are mentioned, it is USA Pacific Time. The E-mini day session charts begin at 6:30 am PT and end at 1:15 pm PT which is 15 minutes after the NYSE closes. You can read background information on the market reports on the Market Update page.
