Market Overview: S&P 500 E-mini Futures
The weekly E-mini bulls want a retest of the high. Bulls need sustained buying to increase the odds of trend resumption. If the market trades higher, bears want a weak retest of the trend extreme, forming a lower high major trend reversal or a small double top.
S&P500 E-mini futures
The Weekly S&P 500 E-mini chart
- This week formed a doji bar closing in its upper half with a long tail below.
- Last week, we said traders would watch whether bears could create a strong bear entry bar testing near the April 23 low area, or whether the market would trade slightly lower but find more buyers below the tight bull channel, followed by a retest of the all-time high within the next few weeks.
- The market traded lower during the first half of the week but pulled back up by Friday.
- Bulls 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 the last two weeks as a pullback and want at least a small sideways-to-up leg to retest the all-time high.
- Bulls want the pullback to be weak and sideways, lacking follow-through, with overlapping candlesticks and prominent lower tails.
- Bulls hope there are more buyers below the tight bull channel. So far, this appears to be the case.
- They hope the pullback has alleviated the recent overbought conditions.
- Bulls need to generate a strong bull entry bar triggering the High 1 buy setup, followed by sustained buying, to increase the odds of trend resumption.
- If the market trades lower, bulls want the 20-week EMA or the April 23 low (the start of the bull channel) to act as support.
- Bears view the recent move as an unsustainable buy climax.
- Bears want a failed breakout above the trend channel line within a few bars. So far, the market has traded back into the bull channel.
- Bears target a test of the April 23 low, which marked the start of the bull channel, or a test of the bull trend line.
- Bears hope for a two-legged sideways-to-down pullback lasting a few weeks.
- If the market trades higher, bears want a weak retest of the trend extreme, forming a lower high major trend reversal or a small double top.
- Bears need to create strong consecutive bear bars to indicate strength. Without that, traders will be reluctant to sell aggressively.
- Previously, the market rallied in a strong spike and channel bull trend, breaking above the trend channel line.
- Breakouts above a trend channel line typically fail within two to five bars. So far, this appears to be the case.
- A failed breakout above a trend channel line can potentially lead to a test of the bull trend line.
- However, if the pullback is mostly sideways, with overlapping candlesticks and prominent lower tails, it can indicate strong bulls and increase the odds of a trend continuation after the pullback.
- The pullback over the last two weeks was the first sign of bearish strength since the rally began at the end of March. The first pullback may only be minor.
- The long tail below this week’s candlestick suggests that bears are not yet strong.
- Traders will watch whether bulls can trigger the H1 buy entry with sustained follow-through buying to retest the all-time high or whether whether bears can create a second leg sideways to down.
- For now, any sideways-to-down pullback would likely be minor, even if it lasts a few weeks.
The Daily S&P 500 E-mini chart
- The market traded lower on Tuesday, forming an outside bear bar with a long tail below. Wednesday retested the June 9 low and closed as an inside bar. By Friday, the market had retested the 20-day EMA.
- Last week, we said traders would watch whether bears could create a strong two-legged sideways-to-down pullback toward the April 23 low area, or whether the move would remain weak and sideways, with overlapping candlesticks, prominent lower tails, and bull bars.
- Bears view the recent rally (June 1) as overextended and climactic.
- Bears want a reversal from a wedge top (May 1, May 14, and June 1) and a higher high major trend reversal (the May 19 pullback broke below a minor bull trend line, followed by a higher-high test on June 1).
- Bears want a failed breakout above the trend channel line, followed by a pullback to test the bull trend line.
- At a minimum, bears want a pullback to test the start of the channel around the April 23 low area.
- Bears see this week as a pullback and want a larger second leg sideways to down.
- They want a retest of the June 9 low, even if it only forms a higher low.
- If the market trades higher, bears want the retest of the all-time high to be weak, forming a lower high major trend reversal or a double top.
- Bears need consecutive strong bear bars to show decisive control.
- Previously, bulls generated a strong spike and channel bull trend.
- 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 the last two weeks as a pullback and want a retest of the all-time high.
- Bulls want the pullback to be weak and sideways, with overlapping candlesticks, bull bars, and prominent lower tails.
- They hope the move has alleviated the recent overbought conditions.
- Bulls need consecutive strong bull bars trading above the 20-day EMA to increase the odds of a retest of the all-time high and trend resumption.
- The pullback over the last two weeks broke below the bull channel, marking the first significant sign of bearish strength since the March 30 low.
- Traders will watch whether bears can create a larger second leg sideways to down to retest the June 9 low or the April 23 low.
- Or traders will watch whether the move remains weak and sideways, with overlapping candlesticks, prominent lower tails, and bull bars, increasing the odds of a retest of the all-time high within the next few weeks.
- Traders expect at least a small sideways-to-up leg to retest the all-time high after the pullback, whether it forms a lower high or continues the trend.
- For now, the pullback may only be minor.
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