Market Overview: S&P 500 Emini Futures
The S&P 500 Emini futures formed a strong bull leg up from the March 13 low. The bulls have a 5-bar bull micro channel which means strong bulls. Often, there are buyers below the first pullback from such a strong bull micro channel. The bears want a reversal down from a wedge top and a lower high major trend reversal. They hope that the strong move up is simply a buy vacuum retest of the February 2 high. They would need to have a strong reversal bar or a micro double top before they would be willing to sell more aggressively.
S&P500 Emini futures
The Weekly S&P 500 Emini chart
- This week’s Emini candlestick was a bull bar with a prominent tail above.
- Last week, we said that the odds slightly favor the Emini to still be in the bull leg phase.
- This week broke above last week’s high and closed slightly above it.
- The bulls got a reversal up from a double bottom bull flag with the December low (Dec 22 and Mar 13).
- By breaking above the December high (in February), they hope the bear trend of successively lower highs and lower lows has ended.
- More likely, they will need to break far above the December and August highs to signal the end of the selloff.
- The bulls want another strong leg up completing the wedge pattern with the first two legs being December 13 and February 2. The third leg up is currently underway.
- At the very least they want a retest of February high.
- The bulls currently have a 5-bar bull micro channel. That means strong bulls. There may be buyers below the first pullback below such a strong bull micro channel.
- The bears got a reversal down from a higher high major trend reversal in February.
- They then got a second leg sideways to down from a lower high major trend reversal (Mar 6).
- However, they were not able to create follow-through selling in March.
- The bears hope that the current pullback is simply a buy vacuum retest of the February 2 high.
- They want a reversal down from a lower high major trend reversal or a double top with February 2 high and a larger wedge pattern (Dec 13, Feb 2 and April 14).
- Because of the strong move-up, the bears will need a strong sell signal bar or a micro double top before they would be willing to sell more aggressively.
- Since this week was a bull bar closing in the upper half, it is a buy signal bar for next week.
- However, it is appearing near the top of the 25-week trading range. Buying at the top of a trading range is not an ideal setup.
- Traders will BLSH (Buy Low, Sell High) until there is a strong breakout above the February high with follow-through buying.
- As strong as the current move up is, it could simply be a buy vacuum retest of the trading range high.
- For now, traders will see if the bulls can create a strong retest and breakout above February 2 high or will the bears form a decent sell signal bar within the next few weeks.
The Daily S&P 500 Emini chart
- The Emini traded sideways to up for the week.
- Last week, we said that the odds slightly favor the Emini to trade at least a little higher, possibly retesting the February high.
- This week traded slightly higher but has not yet reached the February high.
- The current leg up from March 13 low is in a tight bull channel, which means persistent bulls.
- This week formed the second leg sideway to up after a small pullback. However, the move-up has a lot of overlapping candlesticks which means a loss of momentum.
- The bulls want a retest of the February high followed by a breakout and another big leg up, completing the wedge pattern with the first two legs being December 1 and February 2.
- By trading above the December high (in February), the bulls hope that the bear trend has ended, and the market has either transitioned into a trading range or a bull trend.
- More likely, the bulls will need to break far above the December and August highs, to convince traders that the bear trend from January 2022 has ended.
- The bears see the move up from October 2022 simply as forming a larger double top bear flag (Aug 16 and Feb 2) within a broad bear channel.
- They determined that the August high is the last major lower high, therefore, believe that the Emini is still in a bear trend.
- They want a retest of the October low from a lower high major trend reversal or a double top (Feb 2).
- They also see a larger wedge top forming (Dec 1, Feb 2 and April 14) with a smaller wedge in the current leg up (Mar 22, Apr 4, and Apr 14).
- The problem with the bear’s case is that the buying pressure since March 13 low is stronger with bull bars closing near their highs and bear bars having little follow-through.
- They need to create consecutive bear bars closing near their lows to increase the odds of lower prices.
- While the move up is strong, it could simply be a buy vacuum retest of the February 2 high.
- The large wedge and smaller wedge in the current leg up increase the odds that we may see a pullback which may begin at any moment.
- If the pullback begins, traders will see if the bears can create strong consecutive bear bars closing near their lows.
- If they do, it increases the odds of the bear leg beginning within the 25-week trading range around 3750 and 4200.
- Traders will BLSH (Buy Low, Sell High) until there is a breakout from either direction with follow-through buying/selling.
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