Market Overview: S&P 500 Emini Futures

The S&P 500 Emini market formed a weekly Emini lower high major trend reversal this week. The bears need to create a follow-through bear bar to increase the odds of lower prices. The bulls want the 20-week EMA, the October/November lows, or the bull trend line to act as support.

S&P 500 Emini Futures

The Weekly S&P 500 Emini Chart

• This week’s Emini candlestick was an outside bear bar closing near its low and below the 20-week EMA.
• Last week, we said that traders would see if the bulls could create a strong bull entry bar (a follow-through bull bar) closing near its high, or if the market would trade slightly higher but stall and close with a long tail above or a bear body instead.
• The market opened higher early in the week but reversed to close as an outside bear bar.
• The bears got a pullback from a large wedge (Mar 21, Jul 16, and Dec 6), an embedded wedge (Aug 30, Oct 17, and Dec 6) and a micro wedge (Nov 22, Nov 29, and Dec 6).
• They hope to get a TBTL (Ten Bars, Two Legs) pullback lasting at least a few weeks. The two-legged pullback is currently underway.
• They see this week forming a lower high major trend reversal and want a strong second leg sideways to down.
• Since this week closed below the 20-week EMA, the bears need to create a follow-through bear bar to increase the odds of lower prices.
• They must create consecutive bear bars closing near their lows to convince traders that they are back in control.
• The next targets for the bears are the October / November lows and the bull trend line.
• The bulls see the market as being in a broad bull channel and want the market to continue sideways to up for months.
• They see the current move as a two-legged pullback and want the market to resume higher from a double bottom bull flag (Nov 4 and Jan 10).
• They hope that the pullback will have poor follow-through selling.
• They want the 20-week EMA, the October/November lows, or the bull trend line to act as support.
• Since this week’s candlestick is a bear bar closing near its low, it is a sell signal bar for next week.
• The market may still trade slightly lower towards the October/November lows or the bull trend line area.
• Traders will see if the bears can create a follow-through bear bar following this week’s close below the 20-week EMA.
• Or will the market trade slightly lower but close with a long tail below or a bull body instead?
• The market has entered a trading range phase.
• The bears need to do more and create sustained follow-through selling to convince traders that they are back in control.
• If the pullback remains sideways and shallow (overlapping candlesticks, with bull bars, doji(s), and candlesticks with long tails below), the odds of a bull trend resumption will increase after that.
• For now, odds slightly favor the pullback to be minor and not lead to a reversal.

The Daily S&P 500 Emini Chart

• The market opened higher on Monday but lacked follow-through buying. The Emini then traded sideways to down for the rest of the week.
• Previously, we said that traders would see if the bulls could create a retest of the all-time high and a breakout above within the next few weeks or if the bears would be able to create a second leg sideways to down (perhaps testing the Oct/Nov lows) instead.
• So far, the bears have created 3 pushes down (Dec 20, Jan 2, and Jan 10).
• The bears got a reversal from a large wedge pattern (Mar 21, Jul 16, and Dec 6) and an embedded wedge (Aug 30, Oct 17, and Dec 6).
• They want a pullback lasting at least a few weeks – a TBTL (ten bars, two legs) pullback. The pullback has fulfilled the minimum requirements.
• They want the 20-day EMA or the bear trend line to act as resistance. So far, this is the case.
• They want another strong leg down to test the October/November lows and the 200-day EMA from a double top bear flag (Dec 26 and Jan 6).
• If the market trades higher, they want a wedge bear flag with the first two legs being December 26 and January 6.
• They must create consecutive bear bars closing near their lows to show they are back in control.
• The bulls see the market trading in a broad bull channel and want the move to continue for months. They want an endless pullback bull trend.
• They want a retest of the all-time high (Dec 6) from a wedge bull flag (Dec 20, Jan 2, and Jan 10).
• If the market trades lower, they want the October/November lows or the 200-day EMA to act as support.
• So far, the market has transitioned into a trading range.
• The bears need to create consecutive bear bars closing near their lows and trading far below the 200-day EMA to increase the odds of a reversal.
• The market may still trade at least a little lower.
• Traders will see if the bears can create follow-through selling breaking far below the October/November lows or the 200-day EMA.
• Or will the bulls be able to create a reversal from a wedge bull flag instead?
• For now, odds slightly favor the pullback to be minor and not lead to a reversal.