Consecutive Strong Monthly E-mini Bull Bars

Market Overview: S&P 500 E-mini Futures

The market formed consecutive strong monthly E-mini bull bars, breaking into new all-time highs. Bulls want a measured move to around 8000 based on the height of the April spike bar. Bears want a failed breakout above the bull trend channel line within a few months, followed by a retest of the bull trend line.

S&P500 E-mini futures

The Monthly E-mini chart

• May formed a follow-through bull bar, closing near its high.
• Last month, we said traders would watch whether bulls could create follow-through buying and, if the market broke above the bull trend channel line, whether the move would be sustainable or lack follow-through buying.
• The market traded higher, closing above the trend channel line and into new all-time high territory.
• Bulls achieved the measured move to 7550 based on the height of the prior trading range.
• Next, bulls want a measured move to around 8000 based on the height of the April spike bar.
• Bulls want any pullback to be weak and sideways, forming prominent lower tails.
• Bears want a failed breakout above the bull trend channel line within a few months, followed by a retest of the bull trend line.
• They see the current move as part of a climactic rally late in a trend.
• Bears need to create strong bear bars or candlesticks with long upper tails, closing below the middle of their ranges to indicate strength.
• If the market continues higher, bears hope it will form a blow-off top followed by a deep pullback in the months ahead.
• The market pulled back to the 20-month EMA in March and then rallied strongly into new all-time high territory.
• The May monthly candlestick closed near its high, increasing the odds of at least slightly higher prices in June.
• The market could gap up next week. Small gaps often close early.
• Big bull bars late in a trend can be part of a buy climax.
• Consecutive bull bars closing near their highs indicate bullish strength.
• A strong momentum move such as this can last longer than traders expect and sometimes ends in a parabolic buy climax or a blow-off top.
• Traders will watch whether bulls can create follow-through buying in June to test near the 8000 measured move target.
• Or whether the market trades higher but starts forming candlesticks with prominent upper tails, closing below the middle of their ranges, or bear bodies instead.
• Breakouts above or below trend channel lines typically fail within 2–5 bars (months).

The Weekly S&P 500 E-mini chart

• This week formed a bull bar, closing near its high after gapping up on Tuesday.
• Last week, we said traders would watch whether bulls could create more follow-through buying or whether the market would start to stall around the trend channel line area.
• Bulls have generated a strong rally in a spike and bull channel from the March 30 low.
• Bulls want a measured move to around 8000, based on the height of the initial spike (from the March 30 low to the April 17 high).
• Bulls see this week as the second push up within the bull channel (the first push being May 14) and want at least another small push up to complete the third leg of a wedge top following any pullback.
• If the market forms a pullback, bulls want it to be weak and sideways, lacking follow-through, with overlapping candlesticks and prominent lower tails.
• Bulls want at least a small sideways-to-up move to retest the trend extreme high (currently May 29) following any pullback.
• If the market trades lower, bulls want the April 23 low (the start of the bull channel) or the 20-week EMA to act as support.
• Bears view the move as a buy climax that is unsustainable.
• Bears want a failed breakout above the trend channel line within a few bars, followed by a test of the bull trend line.
• Bears want a two-legged sideways-to-down pullback lasting a few weeks.
• Bears need to generate strong bear bars breaking below the minor bull trend line to indicate strength.
• After that, bears want a weak retest of the trend extreme high, forming a lower high major trend reversal or a small double top.
• The problem with the bears’ case is that they have not been able to create bear bars indicating control. Until then, traders will likely be unwilling to sell aggressively.
• The market has rallied strongly over the past 9 weeks in a tight bull channel.
• The market remains Always In Long.
• While the move is strong, it has lasted a long time without a significant pullback, which is unsustainable and tends to attract profit-taking.
• However, a strong momentum move can sometimes last longer than traders expect.
• Traders will watch whether bulls can create more follow-through buying towards the next measured move around 8000.
• Or whether the market starts to form bars with prominent upper tails or bear bars.
• Breakouts above a trend channel line typically fail within 2 to 5 bars, leading to a pullback into the bull channel or a test of the bull trend line.
• The market may still be in the sideways-to-up phase, while the risk of a pullback from an overextended move is increasing.
• For now, any pullback would likely be minor.

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