Market Overview: S&P 500 Emini Futures
The S&P 500 Emini futures November candlestick was an Emini consecutive bull bar following a wedge bull flag. The bulls will need to create another follow-through bull bar breaking far above the major bear trend line to increase the odds of higher prices.
The bears hope that the current move is simply forming a pullback and want a retest of the October low. However, because November was a bull bar closing near the high, it is a weak sell signal bar for December.
S&P500 Emini futures
The Monthly Emini chart
- The November monthly Emini candlestick was a bull bar closing near the high with a long tail below.
- Last month, we said that odds slightly favor the Emini to retest October high in the first half of November.
- The Emini traded higher in the first half, followed by sideways and spiked up to close near the high on the last day of the month.
- The bulls see the current selloff from January as a wedge bull flag (February 24, June 17 and October 13).
- They got a follow-through bull bar in November which increases the odds that the Emini will trade at least a little higher.
- The Emini also closed back above the 20-month exponential moving average.
- The bulls will need to create another follow-through bull bar breaking far above the major bear trend line to increase the odds of higher prices.
- The move down since January has a lot of overlapping bars. The bears are not as strong as they hope to be.
- The bears got a 3rd leg down in October, but it reversed into a bull bar.
- They hope that the current move is simply forming a pullback and want a retest of the October low.
- They then want a breakout followed by a measured move down to 3450 or the 3400 Big Round Number which is also the 2020 high.
- Because November was a bull bar closing near the high, it is a weak sell signal bar for December.
- The last 2 candlesticks are consecutive bull bars closing near their highs with long tails below. That reflects strong bulls.
- We said that if November closes as a consecutive bull bar, the 2-legged sideways to up pullback may likely be underway. This remains true.
- December is the last month of the year. Its close will affect the yearly candlestick. Bulls want a close above the middle of the bar around 4150 while bears want a close below it.
- 4150 may become a magnet by the end of the month.
The Weekly S&P 500 Emini chart
- This week’s Emini candlestick was a bull bar with tails above and below.
- Last week, we said that the odds slightly favor the Emini to trade at least a little higher. Traders will see if the bulls can get a follow-through bull bar or if the Emini trades higher first but reverses into a bear bar.
- This week closed in the upper half of the range and above the high of the prior 2 candlesticks.
- The bulls got a reversal higher from a wedge bottom (Feb 24, June 17 and Oct 13) with a nested wedge (Sept 6, Sept 30 and Oct 13).
- They then got a second leg sideways to up from a higher low major trend reversal (Nov 3).
- While the move up from October low is in a tight bull channel, there is a lot of overlapping price action.
- That means the bulls are not yet as strong as they would like to be.
- The problem with the bull’s case is that the selloff from August was very strong. The sideways to up leg may lead to a lower high. For now, this remains true.
- The bulls need to create strong consecutive bull bars closing near their highs breaking far above the major bear trend line to signal the end of the correction.
- Since this week was a bull bar, it is a buy signal bar for next week. However, the prominent tail above makes it a slightly weaker buy signal bar.
- The bears hope that the current pullback is simply forming a wedge bear flag (Oct 5, Nov 15, and Dec 1) or a double top bear flag (Sept 12) and a lower high.
- Since the October low, the bull bars are big, closing near their highs, while the bear bars are weak and had no follow-through selling. That means stronger buying pressure.
- The bears will need at least a strong reversal bar or a micro double top before they would be willing to sell more aggressively.
- They want a retest of the October low followed by a strong breakout and a measured move down to around 3450, or the 3400 Big Round Number which is also 2020 high.
- Bears see the selloff from January as a broad bear channel. The major bear trend line remains as resistance above.
- For now, odds slightly favor the Emini to trade at least a little higher.
- Traders will see if the bulls can get another consecutive bull bar or if next week trades higher first but reverses into a bear bar.
- The wedge bear flag increases the odds of a pullback within 1 – 3 weeks. If there is a pullback, odds slightly favor a larger second leg sideways to up to retest the leg extreme after the pullback.
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