Market Overview: S&P 500 Emini Futures
The S&P 500 Emini futures weekly candlestick was a bull doji therefore the bulls got buying follow-through following last week’s breakout above the February 2 high. The bull’s next target is the August high. The bears want a failed breakout above the February 2 high and a reversal down from a wedge pattern (Dec 13, Feb 2, and Jun 9) and a double top with the August high.
S&P500 Emini futures
The Weekly S&P 500 Emini chart
- This week’s Emini candlestick was a bull doji closing slightly above the middle of the week’s range and above last week’s high.
- Last week, we said that odds continue to favor the market to still be in the sideways to up phase until the bears can create credible selling pressure.
- The bulls got buying follow-through bar (albeit weaker) following last week’s breakout above the February 2 high.
- They 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.
- They got a breakout from the 6-week tight trading range which turned into a bull flag.
- They want a breakout far above February 2 high followed by a measured move using the height of the 6-month trading range which will take them to the March 2022 high area.
- The next target for the bulls is the August 2022 high.
- The bears want a reversal down from a wedge pattern (Dec 13, Feb 2, and Jun 9) and a double top with the August high.
- They hope that the 6-week tight trading range is the final flag of the leg up and want a failed breakout above the February 2 high.
- If there is a failed breakout, it would usually occur within 5 bars after the breakout.
- The problem with the bear’s case is that they have not been able to create credible selling pressure since the March low.
- They will need to create strong bear bars with follow-through selling to convince traders that a deeper pullback could be underway.
- At the very least, the bears will need a strong reversal bar or a micro double top before they would be willing to sell more aggressively.
- Since this week was a bull doji, it is a weaker buy signal bar for next week. It is not a strong sell signal bar.
- While the odds slightly favor the market to still be in the sideways to up phase, a minor pullback can begin at any moment.
- Traders will see if the bulls can continue creating consecutive bull bars or will the Emini stall around the current levels and begin the pullback phase.
The Daily S&P 500 Emini chart
- The Emini was trading sideways throughout most of the week but broke higher on Friday, closing as a doji bar.
- Previously, we said that the odds continue to slightly favor the market to still be in the sideways to up phase until the bears can create strong bear bars.
- The bulls got some follow-through buying following last week’s break above the February 2 high.
- They want a measured move up using the height of the 6-month trading range which will take them near the March 2022 high.
- They will need to break far above the August high with follow-through buying to increase the odds of reaching the measured move target.
- The bears have not yet been able to create sustained follow-through selling.
- They see the move up from October 2022 simply as forming a large wedge (Dec 13, Feb 2, and Jun 9) within a broad bear channel.
- They hope that the tight trading range this week (Monday to Thursday) formed a smaller final flag in the current leg up.
- They see a smaller wedge (May 30, Jun 5, and Jun 9) forming too.
- If the Emini trades higher, they want the market to stall around the trend channel line.
- The bears will need to create strong bear bars with follow-through selling to increase the odds of a deeper pullback.
- Since Friday was a bear doji bar, it is a neutral signal bar for Monday.
- The breakout above the February 2 high so far has a lot of overlapping candlesticks. It’s not as strong as the bulls hope it would be.
- Because of the lack of strong bear bars with follow-through selling, odds continue to slightly favor sideways to up.
- This can change if the bears manage to create strong consecutive bear bars closing near their lows (bear spike) next week.
- If there is a pullback, a reasonable target would be the breakout point (February 2 high) or the 20-day exponential moving average area.
- Traders will still expect at least a small leg to retest the current leg extreme high (Jun 9).
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