Market Overview

S&P 500 E-Mini Breaks Out Above All-Time High

 

Market Overview: S&P 500 Emini Futures

The monthly chart formed an S&P 500 Emini breakout above the prior all-time high. The bulls will need to create a follow-through bull bar in March to confirm the breakout even if it is just a bull doji. The bears will need a strong sell signal bar or a micro double top before traders will be willing to sell more aggressively.

S&P 500 Emini FuturesEmini Monthly Chart

  • The February monthly Emini candlestick was another consecutive big bull bar closing above the all-time high.
  • Last month, we said that the odds slightly favor February to trade at least a little higher. However, the rally has also lasted a long time and is slightly climactic and a minor pullback can begin within a few months before the market resumes higher.
  • The bulls want a breakout above the all-time high and got it in February.
  • They will need to create a follow-through bull bar in March to confirm the breakout even if it is just a bull doji.
  • If the market trades lower, they want it to be sideways with overlapping candlesticks.
  • The bears see the current rally as a retest of the January 2022 all-time high and want a reversal from a higher high major trend reversal.
  • They also see a large wedge pattern (Dec 2, July 27, and Mar 1).
  • Because of the strong rally in the last 4 months, they will need a strong sell signal bar or a micro double top before traders would be willing to sell more aggressively. So far, there is no strong signal bar yet.
  • Since February closed near its high, it is a buy signal bar for March.
  • For now, odds slightly favor March to trade at least a little higher. 
  • The market remains Always In Long and the bull trend remains intact (higher highs, higher lows).
  • The rally has lasted a long time and is slightly climactic. Traders are looking for signs of a pullback. There are none yet.
  • Until the bears can create a strong sell signal bar, odds continue to favor the market to trade sideways to up.

S&P 500 Emini Weekly Chart

  • This week’s Emini candlestick was a bull bar closing near its high.
  • Last week, we said that while the market continues to be Always In Long, the rally has lasted a long time and is slightly climactic. Traders will see if we start to get more selling pressure or will the bulls continue to create follow-through buying.
  • This week traded sideways to down earlier in the week but reversed higher by the end of the week. The bears are still not able to create any selling pressure.
  • The bulls have a tight bull channel. That means strong bulls.
  • They want a strong breakout into a new all-time high territory, hoping that it will lead to many months of sideways to up trading. 
  • They will need to continue to create sustained follow-through buying above the prior all-time high.
  • We may also see some profit-taking activity once the market starts to stall. 
  • If a pullback begins, the bulls want it to be sideways and shallow, filled with bull bars, doji(s) and overlapping candlesticks.
  • The bears hope that the strong rally is simply a buy-vacuum test of the prior all-time high.
  • They want a reversal from a higher high major trend reversal and a large wedge pattern (Feb 2, July 27, and Mar 1). They want a failed breakout above the all-time high and the trend channel line.
  • They also see a parabolic wedge in the third leg up since October (Nov 22, Dec 28, and Mar 1) and an embedded wedge (Jan 24, Feb 9, and Mar 1).
  • They hope to get a TBTL (Ten Bars, Two Legs) pullback of at least 5-to-10%. They want at least a test of the 20-week EMA.
  • The problem with the bear’s case is that the rally is very strong. They would need to create a few strong bear bars to indicate that they are at least temporarily back in control. So far, they have not yet been able to do so.
  • Since this week’s candlestick is a bull bar closing near its high, it is a buy signal bar for next week.
  • The market continues to be Always In Long and odds slightly favor the market to trade at least a little higher.
  • The rally has lasted a long time and is slightly climactic. Traders are looking for signs of a minor pullback but there are none still. 
  • The bears continue to fail creating any selling pressure.
  • Until the bears can create strong bear bars, traders will not be willing to sell aggressively.
  • Sometimes, a euphoric market (as it is now) can continue higher into a blow-off top (parabolic climax). 
  • Traders will see if the bulls continue to create more follow-through buying.

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