A couple hours before the open today, an announcement on Pfizer (NYSE:) vaccine being 90% effective was made. The raced up 4% to a new high.

Will the rally reach 3884.00, the measured move up from the Sept. 24/Oct. 30 double bottom? It might. Traders want today to be a bull day closing near its high.

Tomorrow is the follow-through day. At a minimum, they want it to close above the open. That combination would increase the chance of higher prices over the next week. What happens at that point will determine if the rally continues.

Traders assume that any breakout, no matter how strong, has a 40–50% chance of failing. If today and tomorrow are big bear days, the odds would go up to 60%.

As a general rule, a big gap has an increased chance of leading to a trend day. If there is a trend, it will more likely be in the direction of the gap (up, in this case).

Huge gaps like this mean that the market has already gone a long way before the market opened. That reduces the chance of the day session becoming a huge bull day. If today is going to be a bull trend day, it will more likely be a smaller bull day. Many traders who are long will see this as a great opportunity to take some windfall profits. The bulls who are not long will want to buy a pullback and will be less willing to buy immediately after such a huge move up. Also, some bears will bet on at least a small pullback and they will begin to scale into shorts.

Overnight E-mini Globex Trading

The E-mini is up more than 4% in the Globex session. Today will therefore gap far above Friday’s high and the all-time September high.

For daytraders, today will open far above the 20-bar EMA on the 5-minute chart. Many bulls do not like to buy too far above the average price. That reduces the chance of a strong bull trend day that begins on the open. More often, the E-mini will go sideways or even down for a couple hours until it gets closer to the average price. At that point, the bulls will look to buy a double bottom or a wedge bottom.

If there is a trading range open, the bears will look to sell a double top or wedge rally. They then will expect to take profits around the EMA.

The bears would prefer a Bear Trend From The Open, and not just a selloff that leads to a trading range. If the E-mini on the open forms a series of big bear bars closing near their lows, that will increase the chance of today being a bear trend day.

But as I said, an early trading range is what is most likely. Therefore, if there is an early selloff, it will probably be weak and soon evolve into a trading range.