Emini Possible Minor Pullback

Market Overview: S&P 500 Emini Futures

Is this the start of an Emini minor pullback? The bears will need to create consecutive strong bear bars closing near their lows to convince traders that a deeper pullback could be underway. The bulls want any pullback to be shallow and weak (with overlapping bars, doji(s) and bull bars).

S&P500 Emini futures

The Monthly Emini chart

• The July monthly Emini candlestick was another consecutive bull bar closing near its high.
• Last month, we said that odds slightly favor July to trade at least a little higher and traders will see if the bulls can create another follow-through bull bar or will the Emini trade slightly higher but close with a bear body or a long tail above.
• The bulls managed to create consecutive bull bars closing near their highs trading far above the 20-month exponential moving average.
• The move up since March is in a tight bull channel. That means strong bulls.
• They got a strong leg up from the double bottom bull flag (Dec 22 and Mar 13).
• They also got follow-through buying following the breakout above the August high.  
• The next target for the bulls is the March 2022 high and the all-time high. 
• The bears see the current move as a retest of the all-time high.
• They want a reversal down from a lower high major trend reversal.
• The problem with the bear’s case is that they have not been able to create strong selling pressure (bear bars with follow-through selling).
• Since July was a bull bar closing near its high, it is a buy signal bar for August.
• While a minor pullback can begin at any moment (may have begun in Aug?), odds slightly favor there to be buyers below the first pullback. 
• Until the bears can create strong bear bars with follow-through selling, odds slightly favor the market to still be in Always In Long.

The Weekly S&P 500 Emini chart

• This week’s Emini candlestick was a bear bar closing near its low.
• Last week, we said that odds slightly favor a minor pullback to begin anytime and that there is no credible short setup still.
• The bears want a reversal down from a wedge pattern (Dec 13, Feb 2, and Jul 27) and a micro wedge (Jul 14, Jul 19, and Jul 27).
• At the very least, they want a larger pullback from what seems like an extended trend. 
• The problem with the bear’s case is that they have not been able to create strong follow-through selling since the March low.
• They will need to create consecutive strong bear bars closing near their lows to convince traders that a deeper pullback could be underway.
• At the very least, they need to create a follow-through bear bar next week to increase the odds of a pullback to the 20-week exponential moving average.
• The bulls got a strong leg up since March in a tight bull channel.
• Odds are any pullback would likely be minor to be followed by a retest of the current leg extreme (now Jul 27).
• They want a measured move using the height of the 6-month trading range which will take them to the March 2022 high area.
• The move up has lasted a long time (4 months) and is slightly climactic.
• The market may need to trade sideways to down to work off the overbought condition. The minor pullback may have begun this week.
• The bulls want any pullback to be shallow and weak (with overlapping bars, doji(s) and bull bars).
• Since this week’s candlestick was a bear bar closing near its low, it is a sell signal bar for next week.
• The Emini may gap down at the open. Small gaps usually close early.
• For now, odds slightly favor the market to still be in the sideways to down pullback phase.
• Traders will see if the bears can create strong follow-through selling or will the pullback remain sideways and weak (with overlapping bars, doji(s) and bull bars).

Trading room

Al Brooks and other presenters talk about the detailed Emini price action real-time each day in the BrooksPriceAction.com trading room. We offer a 2 day free trial.

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