Market Overview: S&P 500 Emini Futures
The S&P 500 Emini has formed a monthly Emini trading range in the last 5 months. The bulls want a breakout into new all-time highs followed by a measured move based on the height of the 5-month trading range. The bears must create credible selling pressure (strong bear bars with follow-through selling) to show they are back in control.
S&P 500 Emini Futures
The Monthly Emini Chart
- The February monthly Emini candlestick was a bear doji closing below the middle of its range with long tails above and below.
- Last month, we said that traders would see if the bulls could create a breakout above the trading range and close February as a strong bull bar, or if the market would continue to trade sideways within the trading range and breakout below instead.
- So far, the market has continued to trade sideways, forming a 5-month trading range.
- The bulls want the market to continue in a broad bull channel for months.
- They want any pullback to be sideways and shallow (filled with weak bear bars, bull bars, doji(s) and overlapping candlesticks). They want the pullback to have poor follow-through selling. So far, it appears to be the case.
- They hope that the sideways trading range is enough to alleviate the prior overbought condition.
- They want a breakout into new all-time highs followed by a measured move based on the height of the 5-month trading range.
- If the market trades lower, they want the bull trend line or the 20-month EMA to act as support.
- The bears want a reversal from a wedge pattern (Mar 21, Jul 16 and Dec 6). They see a double top (Dec 6 and Feb 19) and 3 push up (Dec 6, Jan 24, and Feb 19 – a triple top).
- They want a breakout below the 5-month trading range followed by a measured move based on the height of the trading range.
- They must create credible selling pressure (strong bear bars with follow-through selling) to show they are back in control. Until they can do that, traders will not be willing to sell aggressively.
- If the market trades higher, they hope the 5-month trading range will be the final flag of the rally.
- So far, the market has traded sideways for the last 5 months.
- February closed as a doji bar near the middle of the trading range which is an area of balance and a magnet.
- The small trading range also indicates the market is in a breakout mode.
- Traders will wait for a strong breakout from either direction and trade in the direction of the breakout for a measured move (based on the height of the trading range).
- The move up since October 2023 has lasted a long time and is slightly climactic.
- However, the bears need to do more by creating credible selling pressure (bear bars with follow-through selling) to show they are back in control.
- For now, traders will wait for a strong breakout from either direction of the 5-month trading range.
- Until there is a breakout, there is no breakout.
The Weekly S&P 500 Emini Chart
- This week’s Emini candlestick was a bear bar closing slightly above the middle of its range with a long tail below.
- Last week, we said because of the repeated failed attempts to break into new all-time highs, the market could now form a pullback instead. If the bears can create follow-through selling, we may see a deeper pullback testing near the January 13 low area.
- The bulls see the market as being in a broad bull channel and want the Emini to continue sideways to up for months.
- They see this week as a pullback forming a double bottom bull flag (Jan 13 and Feb 28) or a wedge bull flag (Nov 4, Jan 13, and Feb 28).
- They want a retest of the all-time high (Dec 6) followed by a breakout and a measured move based on the height of the 23-week trading range.
- They want the 20-week EMA or the bull trend line to be support areas.
- The bears see the recent move as a retest of the all-time high (Dec 6) and a bull leg within the 23-week trading range.
- They want a reversal from a double top (Dec 6 and Jan 24), a lower high major trend reversal and a smaller double top (Jan 24 and Feb 19).
- They want a breakout below the trading range low followed by a measured move based on the height of the 23-week trading range.
- The bears must create follow-through selling trading far below the 20-week EMA and the bear trend line to show they are back in control.
- This week’s candlestick closed near the middle of the 23-week trading range which is an area of balance and a magnet.
- Traders may BLSH (Buy Low, Sell High) within the trading range until there is a breakout from either direction with follow-through buying/selling.
- Since this week closed below the 20-week EMA, traders will see if the bears can create a follow-through bear bar, something they haven’t been able to do since October 2023.
- Or will the market continue to trade sideways and reverse back above the 20-week EMA followed by a retest of the Jan/Feb highs instead?