Weekly Emini Parabolic Wedge

Market Overview: S&P 500 Emini Futures

The market formed a weekly Emini parabolic wedge (Feb 28, Mar 7, and Mar 13). The bulls see the market as being in a broad bull channel and want the pullback to form a higher low. If the market trades higher, the bears want the January 13 low, the bear trend line or the 20-week EMA to act as resistance to act as resistance.

S&P500 Emini futures

The Weekly S&P 500 Emini chart

• This week’s Emini candlestick was a bear bar closing in its upper half with a long tail below.
• Last week, we said traders would see if the bears could create follow-through selling below the January 13 low. If there is a pullback (bounce), traders would see the follow-through buying. If it lacks strong follow-through buying, the odds of another sideways to down leg will increase.
• The market gapped lower on Monday and continued to trade sideways to down until Thursday. Friday traded higher creating a long tail below the candlestick.
• 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 middle of the previous trading range (around the 20-week EMA).
• They want the September or August lows to act as support.
• The bulls need to create consecutive bull bars closing near their highs to show they are back in control.
• 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 4-bar bear microchannel which means strong bears. The last time the market formed 4 consecutive bear bars was in September 2023.
• They want a measured move based on the height of the 23-week trading range which will take them to the 5400 area. The market was about 100 points shy of the measured move this week.
• If the market trades higher, they want the January 13 low, the bear trend line or the 20-week EMA to act as resistance to act as resistance. They want a lower high major trend reversal.
• The move down is strong enough for traders to expect at least a small second leg sideways to down to retest the current leg extreme low (now Mar 13).
• Since this week’s candlestick is a bear bar closing in its upper half with a long tail below, it is a weak sell signal bar for next week. It can be a buy signal bar.
• The market is likely now Always In Short.
• Because of the climactic selloff, the market could form a minor pullback within the next few weeks (a pullback could last 1-3 weeks).
• If a pullback begins but is weak (overlapping sideways, bear bars, doji(s), candlesticks with long tails above), the odds of another leg down will increase.
• Traders will see if the bulls can create a strong entry bar closing near its high. If the market trades higher, traders will see the follow-through buying. If it lacks strong follow-through buying, the odds of another sideways to down leg will increase.
• Or will the market form a retest of the March 13 low and test the measured move 5400 area or lower instead?
• Odds favor at least a small second leg sideways to down after a pullback.

The Daily S&P 500 Emini chart

• The market gapped down on Monday and traded sideways to down until Thursday. Friday gapped higher and closed as a bull bar near its high.
• Last week, we said the market may form a minor pullback because of the parabolic wedge and climactic selloff. If the pullback is weak and lacks strong follow-through buying, the odds of another sideways to down leg will increase.
• The market continued to trade lower without a significant pullback. The move down is in the form of a tight bear channel.
• The bulls see the market trading in a broad bull channel and want the market to form a higher low.
• They want a reversal from a parabolic wedge (Feb 28, Mar 4, and Mar 13) followed by a retest of the all-time high.
• At the least, they want a pullback testing the 20-day EMA or the January 13 low. They want a TBTL (Ten Bars, Two Legs) pullback.
• They hope the September or August low 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. This week’s low was about 100 points shy of the measured move.
• The move down is in a tight bear channel which means strong bears. The selling pressure in the move down is stronger (consecutive bear bars) than the weaker buying pressure (bull bars with no follow-through buying).
• They see the recent sideways trading forming a small double top bear flag (Mar 12 and Mar 14).
• If the market trades higher, they want the January 13 low, the bear trend line or the 20-day EMA to act as resistance, followed by a second leg sideways to down to retest the current leg extreme low (Mar 13).
• So far, the bears got a 10% correction from the all-time high.
• Because of the parabolic wedge (Feb 28, Mar 4, and Mar 13) and climactic selloff, the market may form a minor pullback (bounce) within a few weeks.
• The bulls need to do more to increase the odds of a two-legged pullback (TBTL) by creating strong bull bars with follow-through buying.
• If a pullback forms, traders will see the strength of the move. If it is weak and lacks strong follow-through buying, stalling around the January 13 low, bear trend line or the 20-day EMA, the odds of another sideways to down leg will increase.
• For now, the market likely has flipped into Always In Short.
• Odds favor at least a small second leg sideways to down to retest the current leg extreme low (now Mar 13) after a pullback.

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