Market Overview: Emini Futures
The Strong Bulls formed 3 consecutive bull bars closing near their highs, breaking far above the 20-week EMA and the bear trend line on the weekly chart. They want a resumption of the bull trend. The bears hope to get a reversal from a lower high major trend reversal or a double top.
Emini Futures
S&P 500 Emini Weekly Chart
This week’s Emini candlestick was another consecutive bull bar closing near its high.
Last week, we said that the odds continue to slightly favor the market to trade at least a little higher and traders will see if the bulls can get another follow-through bull bar, closing above the bear trend line.
This week traded higher, and the bulls got a follow-through bull bar closing far above the bear trend line.
The bulls see the move down (from July 27) as a deep pullback of the whole move up which started in October 2022.
They got a reversal from a wedge bull flag (Aug 18, Oct 3, and Oct 27) and a trend channel line overshoot.
They then got a strong rally with consecutive bull bars breaking far above the 20-week EMA and the bear trend line.
The current move-up is in a 4-bar bull microchannel with big bull bars closing near their highs. That means strong bulls.
If they get a couple of strong consecutive bull bars, the odds of the bull trend resuming will increase. The bull trend may be resuming.
If the market trades lower, they want a reversal up from a higher low major trend reversal and the 20-week EMA to act as support.
The bulls will need to create follow-through buying following this week’s close above the bear trend line.
Previously, the bears got the third leg down forming the wedge pattern (Aug 18, Oct 3, and Oct 27).
They wanted a strong breakout below the bull trend line, but the market reversed up with strength instead.
The bears see the strong rally as a retest of the July 27 high and want a reversal from a lower high major trend reversal or a double top.
Since this week’s candlestick is a bull bar closing near its high, it is a buy signal bar for next week.
The market may gap up on Monday. Small gaps usually close early.
Odds continue to slightly favor the market to still be in the sideways to up phase.
Traders will see if the bulls can get another follow-through bull bar or will the market trade slightly higher but close as a doji or with a bear body.
If the market trades slightly lower in the coming weeks, odds slightly favor the bulls to get at least a small second leg sideways to up.
The market gapped above the bear trend line on Tuesday followed by sideways to up trading into Friday.
Last week, we said that the odds slightly favor the market to still be in the sideways to up phase. Traders will see if the bulls can create sustained follow-through trading far above the October high and the bear trend line.
The bulls saw the previous selloff as a deep pullback of the whole rally which started in October 2022.
They got a reversal from a wedge bull flag (Aug 18, Oct 3, and Oct 27) and a trend channel line overshoot.
The move-up is strong with several big gaps that remained open and in a tight bull channel.
The next targets for the bulls are the July 27 high and the all-time high.
They hope that the current rally will form a spike and channel will last for many months.
If the market trades lower, the odds slightly favor at least a small second leg sideways to up.
The bears hope that the strong rally is simply a retest of the July 27 high.
They want a strong reversal down, like the one in August 2022 following a similar strong rally.
They want a reversal down from a lower high major trend reversal and a micro double top (Nov 15 and Nov 17).
For now, the buying pressure remains very strong despite the climactic nature of the move.
Until the bears can create strong bear bars with sustained follow-through selling, odds continue to favor the market to still be in the sideways to up phase.
If there is a larger pullback, odds slightly favor at least a small second leg sideways to up after the pullback.
