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Emini Futures Opened Lower but No Follow-through

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Market Overview: S&P 500 Emini Futures

The S&P 500 Emini futures opened lower but no follow-through selling. The bears hope that this week was simply a pullback and want another leg down forming the wedge pattern with the first two legs being March 2 and March 13. The bulls hope that the current pullback will form a higher low and reverse up from a double bottom bull flag with the December low.

S&P500 Emini futures

The Weekly S&P 500 Emini chart

Emini Futures Opened Lower on Weekly: No Follow-through, DB Bull Flag, Bear Leg in TR
  • This week’s Emini candlestick was a bull bar with a prominent tail above, closing above the middle of the range.
  • Last week, we said that odds slightly favor the Emini to trade at least a little lower and if the bears get strong follow-through selling, the odds of a retest of the October increase.
  • This opened lower but traded sideways to up for the week. The bears did not get follow-through selling.
  • The bears see the move up to February 2 high simply as a two-legged swing up.
  • They got a reversal down from a higher high major trend reversal. 
  • They then got a second leg sideways to down from a lower high major trend reversal (Mar 6).
  • While some traders may view December high as a major lower high, the bears would need to see a break above the August high to be sure of the end of the bear trend.
  • The bears hope that this week was simply a pullback and want another leg down forming the wedge pattern with the first two legs being March 2 and March 13.
  • Since this week was a bull bar with a prominent tail above, it is not a strong sell signal bar for next week.
  • The bulls see the last 8 months as forming an inverted head and shoulders, with the December low being the right shoulder.
  • However, an inverted head and shoulders pattern often ends up as a bear flag instead of a reversal pattern.
  • The bulls hope that the current pullback will form a higher low and reverse up from a double bottom bull flag with the December low.
  • By breaking above the December high, they hope the bear trend of successively lower highs and lower lows has ended.
  • They need to break far above the December and August highs to signal the end of the selloff. 
  • Next week, the bulls will need to create a follow-through bull bar to increase the odds of a retest of the February 2 high.
  • The Emini is in a smaller 21-week trading range around 3750 and 4200.
  • Traders will BLSH (Buy Low, Sell High) until there is a strong breakout from either direction.
  • For now, traders will see if the bulls can create a follow-through bull bar or if next week forms a surprise breakout below the December low.

The Daily S&P 500 Emini chart

Emini Daily: Wedge Bull Flag, Trading Range, Lower High
  • The Emini gapped lower on Monday but the bears did not get follow-through selling. The market traded sideways to up for the rest of the week.
  • Last week, we said that odds slightly favor sideways to down and traders will see if the bears can create follow-through selling breaking far below the December low. 
  • The bears recently got the second leg sideways to down from a lower high major trend reversal (Mar 6).
  • They see the move up from October 2022 simply as forming a double top bear flag (Aug 16 and Feb 2) within a broad bear channel.
  • They determine that the August high is the last major lower high, therefore, believe that the Emini is still in a bear trend.
  • They want a strong break below the December low and a retest of the October low.
  • The bears hope that this week was simply a pullback and want another leg down completing the wedge pattern with the first two legs being February 24 and March 13.
  • They need to continue creating consecutive bear bars closing near their lows to convince traders that a retest of the October low is underway.
  • The bulls got a breakout above December high but did not get sustained follow-through buying.
  • By trading above the December high, the bulls hope that the bear trend has ended, and the market has either transitioned into a trading range or a bull trend.
  • The bulls want the current pullback to stall at a higher low and reverse up from a double bottom bull flag with the December low.
  • They want a retest of February high and another big leg up, completing the wedge pattern with the first two legs being December 1 and February 2.
  • They need to break far above the December and August highs, to convince traders that the selloff from January 2022 has ended.
  • If the Emini trades lower, they want a reversal up from a higher low major trend reversal.
  • Since Friday was an inside bear bar, the Emini is in breakout mode.
  • The first breakout from an inside bar can fail 50% of the time.
  • The Emini is in a smaller 21-week trading range around 3750 and 4200 within a larger trading range.
  • Traders will BLSH (Buy Low, Sell High) until there is a breakout from either direction.
  • The move up from October 2022 may simply be a bull leg within the 4300 and 3500 trading range.
  • For now, traders will see if the bears can create another leg down, breaking below the December low or will next week trades slightly lower but reverse from a double bottom with March 13 low.
  • If the bulls get consecutive bull bars closing near their highs breaking far above the 20-day exponential moving average, the odds of a retest of February high increase.

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