Market Overview: S&P 500 Emini Futures
The market is forming a weekly Emini third leg up after a one-bar pullback (last week). The bulls want another leg up completing the wedge in the third leg up with the first two legs being May 23 and June 28. The bears want a reversal from a higher high major trend reversal, a wedge pattern (Jul 27, Mar 21 and Jul 5) and a trend channel line overshoot.
S&P500 Emini futures
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 traders would see if the bears can create a strong entry bar or will the market trades slightly lower but lacks follow-through selling.
- The market traded slightly lower earlier in the week but lacked follow-through selling and reversed into the new all-time high territory.
- The bulls 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.
- They also want another leg up completing the wedge in the third leg up with the first two legs being May 23 and June 28.
- The bears want a reversal from a higher high major trend reversal, a wedge pattern (Jul 27, Mar 21 and Jul 5) and a trend channel line overshoot.
- 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.
- The problem with the bear’s case is that they have not been able to create strong bear bars with follow-through selling.
- The bears need to create bear bars with follow-through selling to convince traders that they are at least temporarily back in control.
- Since this week’s candlestick is an outside bull bar closing near its high, it is a buy signal bar for next week.
- Because the market closed near its high, the market may gap up on Monday. Small gaps usually close early.
- Sometimes, the candlestick after an outside bar is an inside bar or has a lot of overlapping price action.
- For now, odds slightly favor the market to still be in the sideways to up phase.
- The move is becoming slightly climactic and overbought and traders are looking for reasons to take profits off the table. However, there are no signs of strong bears yet.
The Daily S&P 500 Emini chart
- The market traded slightly lower earlier in the week but lacked follow-through selling. The market then reversed higher for the rest of the week.
- Previously, we said that odds continue to slightly favor sideways to up, but the move is becoming slightly climactic and overbought. If a pullback forms and is shallow and sideways (with weak bear bars, doji(s), and bull bars), the odds of another leg up after the pullback will increase.
- The market formed a pullback (beginning from the middle of June) that was sideways and shallow. The market is forming another leg up.
- The bears want a reversal from a higher high major trend reversal and a large wedge pattern (Jul 27, Mar 21 and Jul 5).
- They want a reversal from a wedge in the current leg up (Jun 7, Jun 20, and Jul 5) and from a final flag pattern (starting from the second half 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.
- The problem with the Bears case is that they have not yet been able to create consecutive bar bars with follow-through selling.
- 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 completing the wedge pattern in the current leg (with the first two legs being May 23 and Jun 28 highs). The third leg up is currently underway.
- 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.
- The move is becoming slightly climactic and overbought. However, until the bears start creating strong bear bars with follow-through selling, traders will not be willing to sell aggressively.
- For now, traders will see if the bulls can continue to create more follow-through buying.
- Or will the market trade slightly higher but start to stall?
- If the market continues up in a vertical type of trading in the weeks ahead, traders should be prepared for a buy climax followed by a couple of weeks of pullback.
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