The Emini S&P 500 formed a weak Emini pullback, forming an outside bear bar closing near its low. The bears want a retest and breakout below the March 13 low. The bulls want the September or August lows to act as support.
S&P 500 E-mini Futures
The Weekly S&P 500 E-mini Chart
- This week’s Emini candlestick was an outside bear bar closing near its low with a long tail above.
- Last week, we said the pullback phase is currently underway. Traders will see the strength of the pullback. If it is weak, the odds of another leg down will increase. The odds slightly favor the pullback to be minor.
- The market traded higher earlier but reversed lower from midweek onwards.
- The bulls see the market as being in a broad bull channel and want the pullback to form a higher low.
- They want a reversal from a parabolic wedge (Feb 28, Mar 7, and Mar 13).
- They want a retest of the all-time high (Dec 6) and a continuation of the trend.
- At the very least, they hope to get a retest of the 20-week EMA or the middle of the previous trading range.
- The problem with the bull’s case is that the selling pressure (since Feb 19) is stronger vs the weaker buying pressure (bull bars with weak follow-through buying).
- They see this week as a retest of the recent leg extreme low (Mar 13) and hope the market will form a small double bottom.
- They must create consecutive bull bars closing near their highs to show they are back in control.
- They want the September or August lows to act as support.
- The bears got 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).
- The move down is in a tight bear channel, which means strong bears.
- They want a measured move based on the height of the 23-week trading range which will take them to the 5400 area. The March 13 low was about 100 points shy of the measured move.
- If the selloff is strong, the bears want a larger second leg sideways to down with the first leg being the February 19 high to March 13 low. A leg one equals leg two could take the move to around 5200 or lower.
- They see the last two weeks simply as a pullback.
- The second leg, sideways to the down leg, is currently underway to retest the recent leg extreme low (Mar 13).
- The market is likely Always In Short.
- Since this week’s candlestick is an outside bear bar closing near its low, it is a sell signal bar for next week.
- Because the candlestick closed near its low, the market could gap down on Monday. Small gaps usually close early.
- Sometimes, the candlestick after an outside bar could be an inside bar, forming an ioi (inside-outside-inside pattern).
- The odds slightly favor the market to trade at least a little lower to retest the March 13 low.
- Traders will see if the bears can create a retest and break out below the March 13 low.
- Or will the market trade slightly lower but stall around the March 13 low area instead?
- For now, the market remains in the sideways to down phase.
The Daily S&P 500 Emini Chart
- The market gapped up and closed above the 20-day EMA on Monday. Tuesday traded slightly higher but closed as a doji bar. The market reversed lower from Wednesday onward.
- Last week, we said the market could still be in the sideways to up pullback phase, and traders would see the strength of the move. Odds slightly favor at least a small second leg sideways to down to retest the recent leg extreme low (Mar 13) after the pullback.
- The market traded higher to test the 20-day EMA but lacked sustained follow-through buying.
- The bulls see the market trading in a broad bull channel and want the move to form a higher low.
- They want a reversal from a parabolic wedge (Feb 28, Mar 4, and Mar 13) and a higher low major trend reversal.
- They want a TBTL (Ten Bars, Two Legs) pullback and the market to reverse above the 200-day EMA. So far, the pullback has not reached the 200-day EMA.
- The bulls see the current move as a retest of the prior leg’s extreme low (Mar 13).
- They hope to get at least a small retest of the March 25 high, even if it only forms a lower high.
- They hope the March 13 low, or the September or August lows, will act as support.
- The bears got a reversal from a lower high major trend reversal, a double top (Dec 6 and Jan 24), and a smaller double top (Jan 24 and Feb 19).
- They want a measured move (based on the height of the 23-week trading range), which will take them to around 5400. The March 13 low was about 100 points shy of the measured move.
- If the selloff is strong enough, the bears want a leg 1 equals leg 2 measured move (the first leg being the Feb 19 high to Mar 13 low) which will take the market to 5200 or lower.
- The downward trend since February 19 is strong. The market likely has flipped into Always In Short.
- If the market trades higher, they want the market to form a larger double top bear flag with the March 25 high.
- They want the bear trend line, the 20-day EMA or the 200-day EMA to act as resistance. So far, this is the case.
- The bears want a strong retest and breakout below the March 13 low.
- So far, the market has formed a pullback to the 20-day EMA, followed by a retest near the March 13 low.
- Because Friday’s candlestick was a big bear bar closing near its low, the market could gap down on Monday. Small gaps usually close early.
- Traders will see if the bears can create strong follow-through selling breaking below the March 13 low.
- Or will the market trade slightly lower but stall around or slightly below the March 13 low area?
- For now, the market remains in the sideways to down phase.