Market Overview: S&P 500 Emini Futures
The S&P 500 Emini futures traded higher but reversed to close as an Emini outside bear bar. It formed a micro double top with Dec 1 high. The bears want this to be the start of a deeper pullback. Bulls want the pullback to form a higher low and reverse up from a higher low major trend reversal.
S&P500 Emini futures
The Weekly S&P 500 Emini chart
- This week’s Emini candlestick was a big outside bear bar with a small tail below.
- Last week, we said that traders will see if the bears can get a consecutive bear bar. If they do, the odds of the sideways to down pullback phase have begun.
- The bears hope that the move up is simply forming a wedge bear flag (Oct 5, Nov 15, and Dec 1), a double top bear flag (Sept 12) and a lower high.
- This week’s high formed a micro double top (Dec 1).
- Bears see the selloff from January as a broad bear channel. The major bear trend line remains as resistance above.
- Previously from the October low, the bull bars are big, closing near their highs, while the bear bars are weak and had no follow-through selling.
- However, this week was a consecutive bear bar closing near the low. That means an increase in selling pressure.
- The bears hope that the pullback has begun. They will need to create another follow-through bear bar breaking below this week’s low to increase the odds of lower prices.
- They want a retest of the October low followed by a strong breakout.
- While the move up from October low is in a tight bull channel, there was a lot of overlapping price action.
- That means the bulls are not yet as strong as they would like to be.
- The problem with the bull’s case is that the selloff from August was very strong. The sideways to up leg may lead to a lower high. For now, this remains true.
- The bulls need to create strong consecutive bull bars closing near their highs breaking far above the major bear trend line to signal the end of the correction.
- The bulls hope that this week was simply a pullback and a reversal higher from a higher low major trend reversal.
- They want the 20-week exponential moving average to act as support and hope the Emini will trade sideways around it instead of a deep pullback.
- Bulls want next week to close with a bull body even though it may trade slightly lower first.
- The candlestick following an outside bar sometimes is an inside bar or has a lot of overlapping price action. If it is an inside bar, it will form an ioi (inside-outside-inside) breakout mode pattern.
- Since this week was a big outside bear bar closing near the low, it is a good sell signal bar for next week.
- Odds slightly favor the Emini to trade at least a little lower.
- We are entering a seasonally bullish window (Santa Clause Rally).
- Traders will see if the bears can create strong follow-through selling, or if next week trades lower but reverses to close with a bull body.
The Daily S&P 500 Emini chart
- Tuesday gapped higher retesting the December 1 high but reversed into a big bear bar. The Emini then traded lower for the rest of the week.
- Last week, we said that the odds slightly favor the Emini to trade at least a little lower. Traders will see if the bears can create a strong second leg sideways to down or if next week trades slightly lower but reverses up again to retest December 1 high.
- The bears want a reversal down from a wedge bear flag (Nov 1, Nov 15, and Dec 1), a double top bear flag (Sept 12), and a double top (Dec 1 and Dec 13), around the major bear trend line.
- Bears see the selloff from January as a broad bear channel.
- They want a retest of the October low followed by a strong breakout and a measured move down.
- They will need to create strong consecutive bear bars closing near their lows (like August) to increase the odds of a reversal down.
- The move down from December 13 is strong with a gap and micro gaps. The bears want at least a small second leg sideways to down leg after a pullback.
- So far, the bulls have yet to break far above the major bear trend line.
- They hope that the current pullback will form a higher low and reverse up from a higher low major trend reversal.
- The problem with the bull’s case is that the selloff from August 16 was very strong. The current sideways to up pullbacks may lead to a lower high. For now, this remains true.
- The move up from October had a lot of overlapping price action. The bulls are not yet as strong as they would like to be.
- The bulls need to create strong consecutive bull bars closing near their highs and trading far above the major bear trend line, to convince traders that the selloff from January has ended.
- For now, the Emini may trade at least a little lower.
- However, we are entering into a seasonally bullish window (Santa Clause Rally).
- Traders will see if the bears can create strong follow-through selling and another leg lower after a small pullback or if next week trades slightly lower but reverses up again to retest the bear trend line.
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