Emini S&P Day Trading Pattern: Trend Sell Day (Signal ID – Trend Sell)

By Lawrence

trendselldayEmini S&P is famous for its very unforgiving trend sell days. The day starts out dropping quickly similar to many other days that make their low first. Yet, bottom pickers are trapped with a stair steps of flushes making new low after new low. By the end of the day, these trend sell days usually end with yet another all out melt down into the close. If you’ve got the chance to talk to other traders, many of them will simply blame the market for taking money from them. You seldom hear people joking on these trend sell days (may be with the exception in my real-time chatroom) because many people are burned.

Trend sell days do not really start the day like a normal bullish day which has it low of the day made first. People simply followed the wrong cue and got trapped. I am going to explain what sell days really are, how to identify them, how to profit from them and follow up with examples like what I did with the trend buy days article.

Trend Sell Days Are Different From Trend Buy Days

In trend buy days, the main supply of fuel to force Emini S&P to go higher are the trapped shorts.

In trend sell days, however, the main supply of fuel for Emini S&P to go lower are liquidation of long positions. There are two kinds of liquidation. First kind is driven by long only funds that have scheduled to unload certain percentage of their stock portfolio. Second kind is driven by panic selling which is always a mix of retail investors and long side funds. Due to the sheer size of unloading that has to be done, the normal intraday players and liquidity providers are taken by surprise and often got caught on the wrong side of the market. Their actions in turn exaggerate the selloff.

Sometimes, there are also the situations that S&P just fall on its own due to lack of buying. Mainstream media coined the term buyer boycott to label this type of selloffs. This type of selling actually happens quite often just that the magnitude of selling does not always make it to the headlines. Buyer boycott usually happens when Emini S&P has rise sharply higher with little or no volume. Since the price is so far away from the nearest support level, not even the most aggressive long side players are willing to chase the market. That created a vacuum for which Emini S&P has to fall through until it can gather enough buyers willing to participate again.

Trend Sell Days Are Easy To Identify

The basic setup for potential trend sell day in Emini S&P has 3 rules:

(premium member only content below)

 The rest of the article is available to our premium members only.
 Login or upgrade your membership to view this article now.


  • abc999 June 6, 2014 at 11:13 pm

    What is the yellow box, blue line and red line stand for?

    • Lawrence Chan June 6, 2014 at 11:41 pm

      setup period, invalidation price, stop in price

      They were explained in the trend buy day article.

  • eddcmf June 7, 2014 at 11:22 am

    Does it work for other markets e.g. forex too?

    • Lawrence Chan June 7, 2014 at 2:27 pm

      Will get to that soon on the forex side.

      In short, yes. The devil is in the details, as always.

  • You must be logged in to comment. Log in