S&P 500 E-Mini Losing Momentum – Correction Ahead?

2024.09.30 14:05

Market Overview: S&P 500 Emini Futures

The weekly chart indicates an is losing momentum with the progressive smaller bull bars in the last 3 weeks. If the market trades lower, the bulls want the 20-week EMA or the bull trend line to act as support, forming a double-bottom bull flag with the September 6 low. The bears want the market to stall around the current levels and start forming bear bars.

S&P 500 Emini Futures

The Weekly S&P 500 Emini Chart

• This week’s Emini candlestick was a bull doji closing below the middle of its range.
• Last week, we said that the odds slightly favor the market to still be in the sideways to up phase. Traders would see if the bulls can create a breakout into new all-time high territory with follow-through buying or if the market would stall around the July high area forming some bear bars in the weeks ahead instead.
• The market made a new all-time high this week but closed below last week’s high.
• The bulls hope the market is in the broad bull channel phase and want a resumption of the move.
• They must create a strong breakout with follow-through buying to increase the odds of the trend resuming.
• If the market trades lower, they want the 20-week EMA or the bull trend line to act as support, forming a double bottom bull flag with the September 6 low.
• The bears see the current rally as a retest of the prior all-time high.
• They want a reversal from a double top (Jul 16 and Sep 26) and a higher high major trend reversal.
• They want the market to stall around the current levels and start forming bear bars.
• They need to create a few strong bear bars to indicate that they are back in control.
• Since this week’s candlestick is a bull doji closing in its lower half, it is not a strong buy signal bar.
• The candlesticks are becoming smaller over the last 3 weeks indicating a loss of momentum. The risk of a minor pullback is increasing.
• If the bulls can’t create a strong breakout with follow-through buying, we may see another pullback form (probably towards the 20-week EMA area) within a few weeks.
• For now, traders will see if the bulls can create another breakout into new all-time high territory with follow-through buying.
• Or will the market stall around the current levels, forming bear bars in the weeks ahead instead?

The Daily S&P 500 Emini Chart

• The market traded sideways to up for the week. Thursday gapped higher but closed as a bear bar with a long tail below. Friday was an inside bear bar closing in its lower half.
• Last week, we said that the odds slightly favor the market to still be in the sideways to up phase. Traders would see if the bulls can create a strong breakout above the September 19 high with follow-through buying or if the market would trade slightly higher but stall and reverse lower in the weeks ahead.
• The market traded higher for the week but closed below the September 19 high.
• The bulls hope the rally is in a broad bull channel phase and want a resumption of the move.
• They want a strong breakout above the all-time high with follow-through buying.
• The move up since the September 11 low is in a tight bull channel which means persistent buying.
• However, the increasing overlapping candlesticks in the last 2 weeks indicate a loss of momentum.
• If the market trades lower, they want a reversal from a double-bottom bull flag with the September 6 low.
• They want the 20-day EMA or the bull trend line to act as support.
• The bears see the current rally as a retest of the all-time high.
• They want a reversal from a higher high major trend reversal and a double top with the prior all-time high (Jul 16).
• They need to create consecutive bear bars closing near their lows trading far below the 20-day EMA to show they are back in control.
• For now, the market remains Always In Long.
• However, if the market continues to stall, we may see a minor pullback testing the 20-day EMA in the weeks ahead.
• Traders will see if the bulls can continue to create a follow-through buying, breaking into new all-time high territory.
• Or will the market trade stall and reverse lower, forming a retest of the September 11 low instead?

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