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Emini Retested the December High

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Market Overview: S&P 500 Emini Futures

The S&P 500 Emini retested the December high following a 1 bar pullback on the weekly chart. The bulls want a breakout above the December 28 high and retest the all-time high. The bears want the market to stall around the December high area and form a Low 2 sell setup.

S&P500 Emini futures

The Weekly S&P 500 Emini chart

Emini Weekly: Retest December High, Emini Retested the December High
  • This week’s Emini candlestick was a bull bar closing near its high with a small tail above.
  • Last week, we said that the market could still be in the pullback phase. Odds slightly favor the pullback to be minor and the market to still be Always In Long.
  • This week’s candlestick opened higher and retested the December 28 High.
  • Previously, the bulls got a strong rally in the form of a 10-bar bull microchannel with bull bars closing near their highs. That means strong bulls.
  • Usually, traders expect buyers below the first pullback from such a strong bull microchannel. It was the case this time.
  • The next target for the bulls is the all-time high. They want a strong breakout into new all-time high territory, hoping that it will lead to many months of sideways to up trading.
  • The bears hope that the strong rally is simply a buy-vacuum test of what they believe to be a 37-month trading range high.
  • They want a reversal from a higher high major trend reversal (with the July 27 high) or a lower high major trend reversal (with the all-time high). 
  • They also see a large wedge pattern (Feb 2, July 27, and December 28), a micro wedge (Dec 14, Dec 20, and Dec 28) and a small double top (Dec 28 and Jan 12).
  • The problem with the bear’s case is that the rally is very strong. 
  • Traders would prefer a second entry (Low 2 sell setup) before they would be willing to sell more aggressively.
  • If the market trades higher, the bears want it to stall around the December 28 high area, forming a bear bar with a long tail above.
  • Since this week’s candlestick is a bull bar closing in the upper half, it is a buy signal bar for next week.
  • Traders will see if the bull can create a follow-through bull bar and resume the move higher.
  • For now, odds slightly favor the market to still be Always In Long.

The Daily S&P 500 Emini chart

Emini Daily: 20-Gap Bar, Breakout above or Double Top?
  • The market traded higher for the week. Thursday traded higher but reversed into an outside bear bar. It however reversed again to close in its upper half. Friday opened higher again but closed with a small bear body.
  • Last week, we said that odds slightly favor the market to still be in the sideways to down pullback phase. Traders still expect the market to form at least a small sideways to up leg to retest the prior leg’s extreme high (Dec 28) after the pullback.
  • This week formed the second leg sideways to up to retest the December 28 high.
  • The bulls got a strong rally with several big gaps that remained open and in a tight bull channel.
  • They hope that the current rally will form a spike and channel which will last for many months after a pullback. 
  • They want the 20-day EMA to act as support and form a 20-Gap-Bar buy setup. 
  • They want a reversal from a double bottom bull flag (Dec 20 and Jan 5) or a wedge bull flag (Dec 14, Dec 20, and Jan 5). They got what they wanted.
  • They want a resumption of the trend to retest the all-time high followed by a breakout above.
  • The bulls will need to create sustained follow-through buying next week to increase the odds of the bull trend resuming.
  • The bears hope that the strong rally is simply a buy vacuum retest of what they believe to be a 37-month trading range high.
  • They want a reversal down from a lower high major trend reversal (against the all-time high), a large wedge pattern (Feb 2, July 27, and December 28) and a double top (Dec 28 and Jan 12).
  • They hope to get at least a TBTL (Ten Bars, Two Legs) pullback. 
  • If the market trades higher, the bears hope that the Emini will stall around the December 28 high area.
  • The bears will need to create consecutive bear bars closing near their lows and trading far below the 20-day EMA to increase the odds of a deeper pullback.
  • For now, the buying pressure remains stronger (tight bull channel, small pullback) as compared with the selling pressure (e.g., weaker bear bars with no follow-through selling this week). 
  • Traders see the recent pullback as long overdue and within expectation. 
  • Odds slightly favor the market to still be Always In Long.
  • Traders will see if the bulls can create sustained follow-through buying above the December 28 high which will increase the odds of reaching the all-time high.
  • Or will the market stall around the December 28 high area?

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