Market Overview: S&P 500 Emini Futures
The monthly chart is forming an Emini test all-time high. The bulls hope that the market will reach the all-time high and break out above. The bears want a reversal from a lower high major trend reversal or a double top and a large wedge pattern (Dec 2, July 27, and Feb 2) forming at the trend channel line area.
S&P500 Emini futures
The Monthly Emini chart
- The January monthly Emini candlestick was another consecutive bull bar with a prominent tail above.
- Last month, we said that the odds slightly favor January to trade at least a little higher. The all-time high is close enough and could be tested in January.
- January traded higher but did not reach the all-time high.
- 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 July to October pullback. The second leg up is currently underway.
- February has traded above the January high. The bulls hope that the market will reach the all-time high and break out above.
- The bears see the current rally as a retest of the January 2022 all-time high and want a reversal from a lower high major trend reversal or a double top.
- They also see a large wedge pattern (Dec 2, July 27, and Feb 2) forming at the trend channel line area.
- Because of the strong rally in the last 3 months, they will need a strong signal bar or a micro double top before traders would be willing to sell more aggressively.
- If February stalls around the January high area or slightly above, it can form a micro double top.
- Since January closed above the middle of its range, it is a buy signal bar albeit weaker.
- For now, odds slightly favor February to trade at least a little higher which it has done.
- The market remains Always In Long and the bull trend remains intact (higher highs, higher lows).
- However, the rally has also lasted a long time and is slightly climactic.
- A minor pullback can begin within a few months before the market resumes higher.
The Weekly S&P 500 Emini chart
- This week’s Emini candlestick was an outside 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 another follow-through bull bar and resume the move higher.
- The bulls continue to get follow-through buying above the December 28 high.
- The move up since October is in a tight bull channel. That means strong bulls.
- The next target for the bulls is the all-time high. They want a strong breakout into a new all-time high territory, hoping that it will lead to many months of sideways to up trading.
- Swing bulls would continue to hold their long position established at lower prices believing any pullback likely to be minor and the market has transitioned into a bull channel phase.
- The bears hope that the strong rally is simply a buy-vacuum test of what they believe to be a 38-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 Feb 2) from around the trend channel line area.
- They hope to get at least a TBTL (Ten Bars, Two Legs) pullback.
- 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.
- They would need a strong reversal bar, a micro double top or a reasonable signal bar for a Low 2 setup before they would think to sell aggressively.
- The bears hope next week will form an inside bear bar, forming an ioi (inside-outside-inside) followed by a breakout below, beginning the TBTL pullback phase.
- If the market trades higher, the bears want the Emini to stall around the trend channel line area or the all-time high area.
- Since this week’s candlestick is an outside bull closing near its high, it is a buy signal bar for next week.
- Sometimes the candlestick after an outside bar is an inside bar, forming an ioi (inside-outside-inside) pattern, a breakout mode pattern.
- While the market continues to be Always In Long, the rally has lasted a long time and is slightly climactic.
- Traders expect a minor pullback (even if it lasts for weeks) and are looking for signs of this.
- Traders will see if the bull can create another follow-through bull bar and resume the move higher. Or will the market stall around the trend channel line area?
Trading room
Al Brooks and other presenters talk about the detailed Emini price action real-time each day in the BrooksPriceAction.com trading room. We offer a 2 day free trial.
Market analysis reports archive
You can access all weekend reports on the Market Analysis page.
