The S&P 500 Emini is forming a weekly Emini trading range. The bears see this week simply as a pullback and want at least a small second leg sideways to down. The bulls see the current move simply as a pullback and want the market to resume higher from a double-bottom bull flag (Nov 4 and Dec 20). They hope that the pullback will have poor follow-through selling.
S&P 500 Emini Futures
The Weekly S&P 500 Emini Chart
- This week’s Emini candlestick was an inside bull doji with a long tail above, closing in its lower half.
- Last week, we said that traders would see if the bears could create more follow-through selling or if the market would retest the all-time high (Dec 6) instead.
- The market traded higher for most of the week. Friday traded lower, closing the week off its high. The bears did not get a follow-through 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 see the market as being extended and overbought and hope to get a TBTL (Ten Bars, Two Legs) pullback lasting at least a few weeks.
- They see this week simply as a pullback and want at least a small second leg sideways to down.
- The next target for the bears is the October / November lows area.
- The bulls created a large wedge pattern (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 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 simply as a pullback and want the market to resume higher from a double bottom bull flag (Nov 4 and Dec 20).
- 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 an inside doji, the market is in breakout mode. The bulls want a breakout above while the bears want a breakout below the inside bar.
- The first breakout can fail 50% of the time.
- Traders will see if the bears can create a second leg sideways to down breaking far below the 20-week EMA or the bull trend line.
- Or will the market continue to stall sideways and retest the all-time high (Dec 6) in the next few weeks instead?
- The market may have entered a trading range phase.
- The bears need to do more and create sustained selling pressure 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 resumption higher will increase.
- 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 traded higher for most of the week. Friday formed a pullback closing as a bear bar with a long tail below.
- Last week, 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 instead.
- 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 double bottom bull flag (Nov 4 and Dec 20).
- They see Friday simply as a pullback and want at least a small second leg sideways to up to retest the all-time high.
- 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 see the move up from October 2023 as extended and overbought and want a pullback lasting at least a few weeks – a TBTL (ten bars, two legs) pullback.
- They see this week as a retest of the prior trend extreme high and want a reversal from a lower high major trend reversal and a head and shoulders pattern.
- If the market trades higher, they want a reversal from a higher high major trend reversal or a double top with the December 6 high.
- They want the 20-day EMA or the bear trend line to act as resistance.
- They need to create consecutive bear bars closing near their lows trading far below the 100-day EMA to show they are back in control.
- So far, the market has transitioned into a 7-week trading range.
- Traders are wondering if the recent pullback to the December 20 low is enough to alleviate the overbought condition.
- The lack of sustained follow-through selling indicates that the bears are not yet as strong as they hoped to be.
- The bears need to create consecutive bear bars closing near their lows to show they are back in control.
- Traders will see if the bulls can create a retest of the all-time high and a breakout above within the next few weeks.
- Or will the bears be able to create a second leg sideways to down (perhaps testing the Oct/Nov lows) instead?
- For now, odds slightly favor the pullback to be minor and not lead to a reversal.