Market Insights

Market Overview: S&P 500 Emini Futures

The weekly S&P 500 Emini bulls need follow-through buying following the breakout above the ioi pattern to increase the odds of another strong leg up. The bears must create strong bear bars trading below the 20-week EMA and the bull trend line to show they are back in control.

S&P 500 Emini Futures

The Weekly S&P 500 Emini Chart S&P 500 E-mini: Bulls Need Follow-Through Buying to Sustain Momentum

  • This week’s Emini candlestick was a bull bar closing near its high with a small tail above.
  • Last week, we said the market formed an ioi (inside-outside-inside) pattern and is in breakout mode. The bulls want a breakout above, while the bears want a breakout below the ioi pattern.
  • The bull got a breakout above the ioi pattern.
  • They see the selloff (Apr 7) forming a major higher low and the market is in a broad bull channel.
  • They hope that the strong selloff has alleviated the prior overbought condition. They want a resumption of the trend.
  • They hope the market has flipped into Always In Long.
  • They want a retest and breakout above the all-time high (Dec 6).
  • They need to create a follow-through bull bar following this week’s breakout above the ioi pattern to increase the odds of another strong leg up.
  • The bears see the current move as a retest of the prior trend’s extreme high (Dec 6).
  • They want the market to form a lower high major trend reversal or a double top with the December 6 high.
  • They must create strong bear bars trading below the 20-week EMA and the bull trend line to show they are back in control.
  • So far, the buying pressure since the April 7 low has been stronger (strong bull bars closing near their highs) than the weaker selling pressure (bear bar with limited follow-through selling).
  • The market likely has flipped into Always In Long.
  • The market could still trade slightly higher.
  • Traders will see if the bulls can create follow-through buying next week.
  • Or will the market trade slightly higher but stall, forming candlesticks with long tails above or with bear bodies in the weeks ahead?

The Daily S&P 500 Emini Chart S&P 500 E-mini: Bulls Need Follow-Through Buying to Sustain Momentum

  • The market traded higher in the first half of the week. Thursday was an outside bear bar, but there was no follow-through selling. The market gapped up on Friday.
  • Previously, we said the odds favor any pullback to be minor and traders expect at least a small sideways to up leg to retest the prior leg high (May 19) after the pullback.
  • The market formed a pullback to the 20-day EMA followed by a retest of the May 19 high this week.
  • The bulls got a strong reversal in a tight bull channel.
  • They see the selloff forming a major higher low (Apr 7) and want the broad bull channel to continue.
  • They hope the selloff has alleviated the prior overbought condition and that the market has flipped into Always In Long.
  • They want a retest of the all-time high followed by a breakout above.
  • If the market trades lower, they want the May 23 low or the 20- or 200-day EMA to act as support.
  • The bears see the current move as a retest of the prior trend extreme high (Dec 6).
  • They want the market to form a lower high major trend reversal and a double top.
  • They see a wedge forming in the current leg up (May 2, May 19, and Jun 6).
  • They want a TBTL (Ten Bars, Two Legs) pullback lasting a few weeks.
  • They must create consecutive bear bars closing near their lows trading far below the 200-day EMA to show they are back in control.
  • The move from the April 21 low is in a tight bull channel which means strong bulls.
  • The market likely has flipped into Always In Long.
  • The move has lasted a long time and is slightly climactic. A minor pullback could form within the next few weeks.
  • If a pullback forms, traders will see the strength of the move. If it remains shallow and weak and holds around the 20-day EMA or the 200-day EMA, the odds of another leg up will increase.
  • For now, traders will see if the bulls can create more follow-through buying.
  • Or will the market stall and form a TBTL (Ten Bars, Two Legs) pullback within the next few weeks instead?