S&P 500 E-Mini: Bulls Hold the Line, but Bears Eye a Trend Reversal

Market Overview: S&P 500 Emini Futures

The bears want a weekly Emini S&P 500 LH MTR (lower high major trend reversal). They must create follow-through selling trading below the 20-week EMA and the bear trend line to show they are back in control. If the market trades lower, the bulls want the 20-week EMA or the bull trend line to be support areas.

S&P 500 Emini Futures

The Weekly S&P 500 Emini Chart

• This week’s Emini candlestick was a bear bar closing near its low.
• Last week, we said the market may still trade a little higher. Traders would see if the bulls could create more follow-through buying breaking into new all-time territory or if the market would stall around the December 6 high area instead.
• The market traded slightly higher but continued to stall around the December 6 high area, forming a strong bear bar.
• The bulls see the market as being in a broad bull channel and want the Emini to continue sideways to up for months.
• They see the recent move (to Jan 13) as a two-legged pullback and want the market to resume higher from a double bottom bull flag (Nov 4 and Jan 13).
• They see the move to February 3 as a pullback and want at least another sideways to up leg (the first leg being the Jan 13 low to Jan 24 high move).
• The market formed the second leg sideways to up in the last 2-3 weeks but is not as strong as the bulls hope for.
• They want a breakout into new all-time highs followed by a measured move based on the height of the 22-week trading range.
• To do that, they must create a strong breakout with sustained follow-through buying.
• If the market trades lower, they want the 20-week EMA or the bull trend line to be support areas.
• The bears got a two-legged pullback (Jan 13) but the follow-through selling below the 20-week EMA was limited.
• They got another pullback to the 20-week EMA (Feb 3) but couldn’t trade far below it.
• They see the current move as a retest of the prior trend extreme high (Dec 6) and a bull leg within the 22-week trading range.
• They want a reversal from a double top (Dec 6 and Jan 24), a lower high major trend reversal and a smaller double top (Jan 24 and Feb 19).
• The bears must create follow-through selling trading below the 20-week EMA and the bear trend line to show they are back in control.
• The next target for the bears is the January 13 low.
• Since this week’s candlestick is a bear bar closing near its low, it can be a sell signal bar for next week.
• The market may gap down on Monday. Small gaps usually close early.
• Because of the repeated failed attempts to break into new all-time highs, the market could now form a pullback instead.
• The bears must create follow-through selling to increase the odds of a deeper pullback.
• The market remains in a 22-week trading range. The December 6 high could be an area of resistance.
• Traders buying here (near the Dec 6 high area) could be buying near the high of the 22-week trading range, which is not an ideal setup.
• Traders may BLSH (Buy Low, Sell High) within the trading range until there is a breakout from either direction with follow-through buying/selling.
• The buying pressure since the January 13 low is stronger than the selling pressure (almost all candlesticks have bull bodies).
• However, if the bears can create follow-through selling next week, we may see a deeper pullback testing near the January 13 low area.
• For now, traders will see if the bears can create follow-through selling trading below the 20-week EMA.
• Or will the market continue to trade sideways forming more bull bars instead?

The Daily S&P 500 Emini Chart

• The market traded slightly higher in the first half of the week. Thursday and Friday traded lower, forming a pullback below the 20-day EMA.
• Last week, we said the market could still trade slightly higher. Traders would see if the bulls could create a retest and a breakout above the all-time high, or if the market would stall around the upper third of the 22-week trading range instead.
• The market stalled around the trading range high followed by a deep pullback on Friday.
• The bulls see the market trading in a broad bull channel and want the move to continue for months. They want an endless pullback bull trend.
• They want a retest of the all-time high (Dec 6) followed by a breakout and trend resumption.
• They made several attempts to retest the all-time high (Jan 24, Feb 19) but couldn’t create a breakout yet.
• They see the move on Friday as a pullback and hope that the February 12 or February 3 lows area will act as support.
• The bears want a reversal from a lower high major trend reversal, a double top (Dec 6 and Jan 24), and a smaller double top (Jan 24 and Feb 19).
• They see the market as being in a 22-week trading range. They hope to get a bear leg to retest the January 13 low followed by a breakout below.
• They want the December 6 high area to act as resistance. So far, this appears to be the case.
• The bears need to create follow-through selling following Friday’s close below the 20-day EMA to increase the odds of a retest of the January 13 low.
• The next targets for the bears are the February 3 and January 13 lows.
• So far, the market is trading in a 22-week trading range.
• Traders may BLSH (Buy Low, Sell High) within the trading range until there is a breakout from either direction with follow-through buying/selling.
• The buying pressure since the January 13 low is stronger (consecutive bull bars) compared with the weaker selling pressure (bear bars with limited follow-through selling).
• After repeated failed attempts to break into new all-time highs, the market may do the opposite and form a pullback instead.
• For now, the market could still trade at least a little lower.
• Traders will see if the bears can create sustained follow-through selling early next week.
• Or will the market quickly reverse back above the 20-day EMA instead?
• The bears must do more to convince traders they are back in control. They can do this by creating a couple of strong consecutive bear bars to increase the odds of testing the January 13 low.

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