Market Overview: S&P 500 Emini Futures
The weekly chart formed an Emini follow-through bull bar closing above the 20-week EMA and the October high. The bulls need to continue creating follow-through bull bar trading above the bear trend line to increase the odds of a retest of the July 27 high. The bears want the October high and the bear trend line to act as resistance. They want a reversal down from a double top bear flag.
S&P500 Emini futures
The Weekly S&P 500 Emini chart
- This week’s Emini candlestick was a bull bar closing near its high.
- Last week, we said that odds slightly favor the market to trade at least a little higher and traders will see if the bulls can get a follow-through bull bar closing above the 20-week EMA and the October high.
- This week traded higher closing above the 20-week EMA and the October high.
- The bulls see the move down (from July 27) as a deep pullback of the whole move up which started in October 2022.
- They got a reversal from a wedge bull flag (Aug 18, Oct 3, and Oct 27) and a trend channel line overshoot.
- They saw the big bull bar last week as evidence of bears taking profit aggressively, believing that the whole move down was simply a wedge bull flag.
- The bulls got a follow-through bull bar this week. If they get a couple of strong consecutive bull bars, the odds of the bull trend resuming will increase.
- If the market trades slightly lower, they want a reversal up from a higher low major trend reversal.
- Previously, the bears got the third leg down forming the wedge pattern (Aug 18, Oct 3, and Oct 27).
- They wanted a strong breakout below the bull trend line, but the market reversed up with strength instead.
- The bears see the recent strong rally simply as a deep pullback and hope to get another leg down to retest the October low from a double top bear flag (Oct 17 and Nov 10).
- They want the 20-week EMA or the October high to act as resistance.
- Since this week’s candlestick is a bull bar closing near its high, it is a buy signal bar for next week.
- The market may gap up on Monday. Small gaps usually close early. (Side note: MOODY’S cut U.S. credit outlook to negative. Will we get a gap down instead?)
- Odds continue to slightly favor the market to trade at least a little higher.
- Traders will see if the bulls can get another follow-through bull bar, closing above the bear trend line.
- If the market trades slightly lower in the coming weeks, odds slightly favor the bulls to get at least a small second leg sideways to up.
The Daily S&P 500 Emini chart
- The Emini traded sideways to up for the week. Thursday was an outside bear bar closing near its low but there was no follow-through selling on Friday, closing as a bull bar above October high.
- Previously, we said that the odds slightly favor the market to trade a little lower. However, a small pullback can begin within 1-3 weeks.
- The pullback has started and the move up is strong.
- The bulls saw the previous selloff as a deep pullback of the whole rally which started in October 2022.
- They want a reversal from a wedge bull flag (Aug 18, Oct 3, and Oct 27) and a trend channel line overshoot. They got what they wanted.
- The move-up was in a strong spike with several big gaps that remained open and a 9-bar bull microchannel.
- Thursday ended the bull microchannel streak. Odds favor buyers below the first pullback from such a strong bull microchannel.
- The bulls need to create follow-through buying above the October high, trading far above the bear trend line to increase the odds of the bull trend resuming.
- If the market trades lower, they want the 20-day EMA to act as support and a reversal up from a higher low major trend reversal.
- The bears wanted a strong breakout below the bull trend line but did not get sustained follow-through selling.
- They hope that the recent rally simply formed a double top bear flag (Oct 17 and Nov 10) and want reversal down to retest the prior leg’s extreme low (Oct 27).
- They want the bear trend line to act as resistance.
- Since Friday was a bull bar closing near its high, it is a buy signal bar for Monday.
- Traders will see if the bulls can create sustained follow-through buying (preferably early in the week) trading far above the October high and the bear trend line.
- Or will the market trade slightly higher but stall around the bear trend line area?
- For now, odds slightly favor the market to still be in the sideways to up phase.
- If the market trades slightly lower, odds slightly favor the bulls to get at least a small second leg sideways to up.
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