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Emini Breakout above the Dec 28 high

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Market Overview: S&P 500 Emini Futures

The weekly chart: The Emini breakout above the Dec 28 high and the bulls need follow-through buying to increase the odds of a retest of the all-time high. The bears want the Emini to stall around the December 28 high area or the trend channel line area.

S&P500 Emini futures

The Weekly S&P 500 Emini chart

Emini Weekly: BO above Dec 28, Bulls Need Follow-through, Emini Breakout above the Dec 28 high
  • This week’s Emini candlestick was a big bull bar closing near its high with a long tail below.
  • Last week, we said that the odds slightly favor the market to still be Always In Long. Traders will see if the bull can create a follow-through bull bar and resume the move higher.
  • The market sold off earlier in the week but reversed to break out above the December 28 high. The bulls managed to get good follow-through buying.
  • Previously, the bulls got a strong rally in the form of a 10-bar bull microchannel with bull bars closing near their highs. That means strong bulls.
  • The next target for the bulls is the all-time high. They want a strong breakout into new all-time high territory, hoping that it will lead to many months of sideways to up trading.
  • (Side note: The cash index SPX or the SPY ETF has already traded and closed above their all-time highs).
  • Swing bulls would continue to hold their long position established at lower prices believing any pullback likely to be minor.
  • The bulls need to create another follow-through bull bar following this week’s close above the December 28 high.
  • The bears hope that the strong rally is simply a buy-vacuum test of what they believe to be a 37-month trading range high.
  • They want a reversal from a lower high major trend reversal (with the all-time high) and a large wedge pattern (Feb 2, July 27, and Jan 20). 
  • The problem with the bear’s case is that the rally is very strong. The only bear bar in the rally had no follow-through selling.
  • Traders would prefer a second entry (Low 2 sell setup) before they would be willing to sell more aggressively. For this, they would need a good sell signal bar.
  • The bears want the Emini to stall around the December 28 high area or the trend channel line area.
  • 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 next week. Small gaps usually close early. If instead the gap remains open and the market continues to rally, that can be a sign of strength.
  • Traders will see if the bull can create a follow-through bull bar and resume the move higher.
  • For now, odds slightly favor the market to still be Always In Long. 

The Daily S&P 500 Emini chart

Emini Daily: Breakout with Follow-through or Failed BO?
  • The market traded lower earlier in the week but reversed into a bull bar on Wednesday followed by a breakout above the December 28 high on Friday.
  • Last week, we said that the odds slightly favor the market to still be Always In Long. Traders will see if the bulls can create sustained follow-through buying above the December 28 high. 
  • The bulls got a strong rally (since Oct) with several big gaps that remained open and in a tight bull channel.
  • They hope that the current rally will form a spike and channel which will last for many months after the current pullback. 
  • They want the 20-day EMA to act as support and form a reversal from a double bottom bull flag (Jan 5 and Jan 17) or a wedge bull flag (Dec 20, Jan 5 and Jan 17). So far this is the case.
  • They want a resumption of the trend to retest the all-time high followed by a breakout above. (Side note: The cash index SPX or the SPY ETF has already traded and closed above their all-time highs on Friday).
  • The bulls will need to create sustained follow-through buying next week to increase the odds of the bull trend resuming.
  • The bears hope that the strong rally is simply a buy vacuum retest of what they believe to be a 37-month trading range high.
  • They want a reversal down from a lower high major trend reversal (against the all-time high), a large wedge pattern (Feb 2, July 27, and December 28) and a failed breakout above the December 28 high.
  • They hope to get at least a TBTL (Ten Bars, Two Legs) pullback. The minimum requirement has been fulfilled in the recent pullback.
  • If the market trades higher, the bears hope that the Emini will stall around the December 28 high area or below the all-time high.
  • The bears will need to create consecutive bear bars closing near their lows and trading far below the 20-day EMA to increase the odds of a deeper pullback.
  • For now, the buying pressure remains stronger (tight bull channel, small pullback) as compared with the selling pressure (e.g., weaker bear bars with no sustained follow-through selling in the recent sideways to down pullback). 
  • Odds slightly favor the market to still be Always In Long.
  • Traders will see if the bulls can create sustained follow-through buying above the December 28 high which will increase the odds of reaching the all-time high.
  • Or will the market trade slightly higher but stall around the December 28 high area?

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