Emini Pullback within Broad Bull Channel

Market Overview: S&P 500 Emini Futures

The monthly chart formed an Emini pullback within a broad bull channel testing the 20-month exponential moving average and the bull trend line. The bulls see the market as still being in a broad bull channel and want a reversal to retest the July 27 high. The bears got the first pair of consecutive bear bars since last year (Sept 2022). They will need to create more follow-through selling closing far below the 20-month EMA to increase the odds of a reversal down.

S&P500 Emini futures

The Monthly Emini chart

• The September monthly Emini candlestick was a big bear bar closing near its low.
• Last month, we said until the bears can create strong bear bars with follow-through selling, odds slightly favor the market to still be in Always In Long.
• The bears managed to get follow-through selling in September testing the 20-month EMA.
• They see the prior rally (Jul 27) as a retest of the all-time high and want a reversal from a lower high major trend reversal.
• September was the first pair of consecutive bear bars since last year (Sept 2022). 
• The bears will need to create more follow-through selling closing far below the 20-month EMA to increase the odds of a reversal down.
• Previously, the bulls managed to create a tight bull channel from March to July. 
• That increases the odds of at least a small second leg sideways to up after the current pullback.
• They see the pullback in August and September simply as a test of the Feb 2 breakout point, the 20-month EMA and the bull trend line. 
• The bulls want the 20-month EMA to hold as support. They see the current move simply as a deep pullback within a broad bull channel.
• They want a retest of the July 27 high followed by a breakout and a test of the all-time high. 
• Since September’s candlestick was a bear bar closing near its low, it is a sell signal bar for October.
• The Emini may still trade at least a little lower.
• Traders will see if the bears can create more follow-through selling closing below the 20-month EMA. 
• Or will the market trade slightly below the 20-month EMA but reverse to close above it by the end of the month?
• For now, until the bears can create consecutive strong bear bars trading far below the 20-month EMA, odds slightly favor the market to still be in Always In Long.

The Weekly S&P 500 Emini chart

• This week’s Emini candlestick was a bear bar with a long tail below.
• Last week, we said that odds slightly favor the Emini to trade at least a little lower and traders will see if the bears can create follow-through selling or will the market trade slightly lower but reverse up with a long tail below or a bull body.
• This week traded lower but reversed to close with a long tail below, closing around the middle of the candlestick.
• Previously, the bulls got a strong trend up (from March) in a tight bull channel. 
• The bulls hope to get a retest of the July 27 high from a double bottom bull flag (Aug 18 and Sept 27).
• They want the Emini to reverse back above the 20-week exponential moving average.
• They see the current move down simply as a deep pullback within a broad bull channel.
• The bears got a two-legged pullback testing the breakout point (Feb 2) and the bull trend line.
• They got follow-through selling this week and a consecutive bear bar below the 20-week EMA.
• They want a strong breakout below the bull trend line with follow-through selling.
• If there is a pullback (bounce), they want another leg down to complete the wedge pattern with the first 2 legs being August 18 and September 27.
• Since this week’s candlestick was a bear bar with a long tail below, it is a sell signal bar for next week albeit weaker.
• Traders will see if the bears can continue creating follow-through selling or will the market stall around the current levels.
• For now, while the Emini could still trade a little lower, odds slightly favor the market to still be Always In Long.
• However, if the bears continue to get consecutive bear bars closing near their lows, that will increase the odds of a reversal down.

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