Market Overview: S&P 500 E-mini Futures
The market formed a weekly E-mini Low 4 sell setup on the weekly chart. Bears need a strong bear entry bar closing near its low, followed by sustained follow-through selling, to increase the odds of a deeper pullback. The lack of strong bear bars with follow-through selling remains a problem for the bears. Bulls need a strong breakout with sustained follow-through buying above the January 28 high to increase the odds of a trend resumption.
S&P500 E-mini futures
The Monthly E-mini chart
- The January monthly E-mini candlestick was a bull doji closing in the upper half of its range, with a small upper tail and a prominent lower tail.
- Last month, we said traders would watch whether bulls could break above the October 29 high with follow-through buying or whether the market would continue to stall and retest the November low.
- The market barely made a new all-time high and mostly overlapped within December’s range.
- Bulls maintained a tight bull channel from the April 7 low, showing persistent buying pressure.
- Bulls expected at least a small sideways-to-up leg to retest the prior trend extreme high (October 29) after the November pullback, which is underway.
- They want a resumption of the bull trend with a measured move to 7,400 based on the height of the recent trading range.
- Bulls need a strong breakout above the October 29 high with sustained follow-through buying to resume the trend.
- If the market trades lower, bulls want the January or December lows to act as support, forming a higher low and a double bottom bull flag with the November low.
- Bears want a reversal from a large wedge top (July 27, December 6, and October 29) and a small double top (October 29 and January 28).
- Bears see the recent sideways overlapping candlesticks as a possible final flag.
- The lack of strong bear bars with follow-through selling remains a problem for the bears.
- Bears need consecutive strong bear bars closing near their lows to show they are regaining control.
- If the market trades higher, bears want any breakout above the all-time high to be weak and result in a failed breakout.
- The rally from the April 7 low remains in a tight bull channel, indicating persistent buying.
- The market is Always In Long.
- While the rally appears climactic and overbought, traders will only sell aggressively if bears produce strong bars with sustained follow-through that flip the market into Always In Short.
- For now, traders will watch whether bulls can break above the sideways trading range with follow-through buying, or whether the market continues to stall near the all-time high and pull back in the months ahead.
The Weekly S&P 500 E-mini chart
- This week’s E-mini candlestick was a bull doji closing near the middle of its range with prominent tails. A doji is a 1-bar trading range.
- Last week, we said traders would watch whether bulls could produce further follow-through buying to new all-time highs or whether the market would continue to stall around the October 29 high area, followed by bear bars in the weeks ahead.
- The market barely made a new all-time high, and the week was mostly sideways, with both bulls and bears active.
- Bears see three pushes up (December 11, December 26, and January 12), forming a wedge top, a double top (October and January 28) and a smaller double top (January 12 and January 28).
- Bears want the October 29 high area to act as resistance. If the market trades higher, they hope follow-through buying will be weak, resulting in a failed breakout.
- They see a Low 4 sell setup forming. Bears need a strong bear entry bar closing near its low, followed by sustained follow-through selling, to increase the odds of a deeper pullback.
- Bears need consecutive strong bear bars breaking well below the 20-week EMA to show control.
- Bulls see the recent pullback as forming a larger double bottom bull flag (December 17 and January 20).
- The last 14 candlesticks still have the shape of an ascending triangle, with pullbacks forming higher lows (December 17 and January 20).
- Bulls need a strong breakout with sustained follow-through buying above the January 28 high to increase the odds of a trend resumption, with a measured move target near 7,400 based on the height of the recent trading range.
- If the market trades lower, bulls want the 20-week EMA to act as support, forming another higher low and trapping eager bears selling the Low 4 setup.
- The market has been trading in a tight range over the past 9 weeks.
- This week’s doji further reflects a balance between bulls and bears.
- The market could continue to trade sideways in the near term.
- For now, traders will watch whether bulls can produce further follow-through buying and break strongly to new all-time highs.
- Or whether the market continues to stall around the current high area, followed by bear bars breaking below the 20-week EMA in the weeks ahead instead.
- Traders will wait for a strong breakout with sustained follow-through, either above the ascending triangle or below the Low 4 sell setup, before trading aggressively.
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