Market Overview: S&P 500 Emini Futures
The weekly chart formed an Emini micro wedge (Jun 7, Jun 12, and Jun 21). The problem with the bear’s case is that they have not been able to create strong bear bars with sustained follow-through selling. The bears need to create a strong entry bar with follow-through selling to convince traders that they are at least temporarily back in control. If the market trades lower, The bulls want the pullback to form a higher low or a double bottom bull flag with the May 31 or the April 19 low.
S&P500 Emini futures
The Weekly S&P 500 Emini chart
- This week’s Emini candlestick was a bull bar with a long tail above, closing above last week’s high.
- Last week, we said that the odds slightly favor the market to still be in the sideways to up phase. However, the move is becoming slightly climactic and overbought.
- The market made a new high but closed off the high.
- The bulls got another follow-through bull bar, but the long tail above indicates some profit-taking activity.
- They hope that the rally will lead to months of sideways to up trading (broad bull channel). They hope that the broad bull channel phase has begun.
- They want to get another strong leg up completing the wedge pattern with the first two legs being July 27 and March 21. The third leg up is currently underway.
- If the market trades lower, they want the pullback to form a higher low or a double bottom bull flag with the May 31 or the April 19 low.
- They want the 20-week EMA or the bull trend line to act as support.
- The bears want a reversal from a higher high major trend reversal, a wedge pattern (Jul 27, Mar 21 and Jun 21) and a trend channel line overshoot.
- They see the sideways trading range in the last 3 weeks of May as a possible final flag of the rally.
- They want a TBTL (Ten Bars, Two Legs) pullback trading far below the 20-week EMA.
- At the very least, they want a retest of the April 19 low, even if it forms a higher low.
- If the market trades higher, they want a micro wedge to form with the first two legs being June 7 and June 12. This week may have formed the micro wedge (Jun 7, Jun 12, and Jun 21).
- They need to create a few strong bear bars to increase the odds of a minor pullback.
- At the very least, they need a strong reversal bar or a strong sell signal bar before traders would consider selling more aggressively.
- Since this week’s candlestick is a bull bar closing around the middle of its range, it is a weak sell signal bar for next week (good-sized bull body).
- The problem with the bear’s case is that they have not been able to create strong bear bars with sustained follow-through selling.
- The bears need to create a strong entry bar with follow-through selling to convince traders that they are at least temporarily back in control.
- For now, traders will see if the bulls can continue to create follow-through buying or will the market start to stall around the current levels and the bears start to get some bear bars.
- Because of the strong trend up, the odds continue to slightly favor sideways to up and any pullback is likely to be minor.
- The move is becoming slightly climactic and overbought.
- If the bears can create a strong entry bar with subsequent follow-through selling, we may start to see a deeper pullback form towards the April 19 low or the 20-week EMA.
- Moving forward, if the market has entered a broad bull channel or a trading range phase, traders should expect more two-sided trading.
The Daily S&P 500 Emini chart
- The market traded sideways to up but closed off the high. Thursday’s candlestick gapped higher but reversed into an outside bear bar. Friday was a doji bar and not a strong follow-through bear bar.
- Last week, we said that the odds slightly favor the market to still be in the sideways to up phase. However, the move is becoming slightly climactic and overbought.
- The bears want a reversal from a higher high major trend reversal and a large wedge pattern (Jul 27, Mar 21 and Jun 21).
- They want a reversal from a smaller wedge in the current leg up (Jun 7, Jun 12, and Jun 21) and from a final flag pattern (3 sideways candlestick in the middle of Jun).
- They want a two-legged pullback lasting at least a few weeks.
- At the very least, they want a retest of the April 19 low, even if it only forms a higher low.
- They need to create consecutive bear bars closing near their lows and trading below the 20-day EMA to increase the odds of a deeper pullback.
- The bulls hope that the current rally will form a spike and (broader) channel which will last for many months.
- They want another strong leg up (with the first leg being the April 19 to May 23 move). The second leg up is currently underway.
- If the market forms a pullback, they want another leg up, completing the wedge pattern (with the first two legs being May 23 and Jun 21 highs).
- If a deeper pullback forms, they want a reversal from a double bottom bull flag (with either May 31 or April 19 lows) and a higher low.
- They want the 20-day EMA or the bull trend line to act as support.
- So far, the market continues to trade sideways to up with not much selling pressure.
- The bears have not yet been able to create strong bear bars with follow-through selling.
- The odds continue to slightly favor sideways to up.
- However, the move is becoming slightly climactic and overbought.
- If a pullback forms, traders want to see the strength of the pullback. If it is shallow and sideways (with weak bear bars, doji(s), and bull bars), the odds of another leg up after the pullback will increase.
- For now, traders will see if the bulls can create more follow-through buying or will the market start to stall and form a minor pullback (probably towards the 20-day EMA area or the bull trend line area).
- For now, the odds favor any pullback to be minor.
- If the bears start getting big bear bars with follow-through selling instead, we may see stronger profit-taking activity begin.
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