Market Overview: S&P 500 Emini Futures
The monthly chart formed an Emini breakout test and a minor pullback. The bulls want a retest of the July 27 high followed by a breakout above. The next targets for the bulls are the March 2022 high and the all-time high. The bears want a reversal down from a lower high major trend reversal. They will need to create follow-through selling to increase the odds of a deeper pullback.
S&P500 Emini Futures
The Monthly Emini Chart
The August monthly Emini candlestick was a bear bar with a long tail below.
Last month, we said that a minor pullback can begin at any moment and odds slightly favor there to be buyers below the first pullback.
August traded below July’s low but reversed to close in the upper half of its range.
The bulls managed to create consecutive bull bars closing near their highs trading far above the 20-month exponential moving average.
The move up since March is in a tight bull channel. That means strong bulls.
That increases the odds of at least a small second leg sideways to up after a pullback.
They also got follow-through buying following the breakout above the August 2022 high.
They see the pullback in August simply as a breakout test of the August 2022 high breakout point.
The next targets for the bulls are the March 2022 high and the all-time high.
The bears see the current move as a retest of the all-time high.
They want a reversal down from a lower high major trend reversal.
The problem with the bear’s case is that they have not been able to create strong selling pressure (bear bars with follow-through selling).
While August had a bear body, the long tail below indicates that the bears are not yet very strong.
The bears will need to create follow-through selling in September to increase the odds of a deeper pullback.
Since August closed in the upper half of its range, it is a buy signal bar albeit slightly weaker (had a bear body).
Until the bears can create strong bear bars with follow-through selling, odds slightly favor the market to still be in Always In Long.
The Weekly S&P 500 Emini Chart
This week’s Emini candlestick was a bull bar closing in the upper half with a small tail above.
Last week, we said if this week’s candlestick is a strong bull bar breaking above the inside bar and closing near its high, it could lead to a retest of the July 27 high.
In a strong trend, the market can resume the move from a pullback even without a strong signal bar. That may be the case this week.
Previously, the bulls got a strong trend up (since March) in a tight bull channel.
That increases the odds of at least a second leg sideways to up after a pullback. The second leg sideways to up is currently underway.
The bulls want the pullback to be shallow and weak and for the 20-week EMA to act as support. So far this is the case.
They want a retest of the July 27 high followed by a strong breakout above.
The next targets for the bulls are the March 2022 high area and the all-time high.
If the market trades lower, they want a reversal up from a double-bottom bull flag with the August 18 low.
They need to create follow-through buying to increase the odds of a retest of the July 27 high and a breakout above.
The bears got a pullback from a climactic move and tested the 20-week exponential moving average.
They hope this week was simply a pullback and want another leg down from a lower high major trend reversal or a double top with the July 27 high.
Since this week’s candlestick was a bull bar closing in the upper half, it is a buy signal bar for next week. It is not a sell signal bar.
For now, odds slightly favor the market to trade at least a little higher and likely still be in Always In Long.