S&P 500 E-Mini Strong Spike: Bulls Target July 287 High

2023.12.11 08:30

Market Overview: S&P 500 Emini Futures

The weekly chart formed an strong spike in the form of a 7-bar bull microchannel. The next target for the bulls is the July 27 high. The bears need to create strong bear bars with sustained follow-through selling to increase the odds of a deeper pullback.

S&P 500 Emini FuturesS&P 500 Emini-Weekly Chart

• This week’s Emini candlestick was another consecutive bull bar closing near its high.
• Last week, we said that the odds continue to slightly favor the market to still be in the sideways to up phase. Traders will see if the bulls can get another follow-through bull bar or will the market trade slightly higher but close as a doji or with a bear body, beginning the minor pullback phase.
• This week opened lower but traded above last week’s high. It was mostly overlapping last week’s range.
• The bulls got a strong rally with consecutive bull bars breaking far above the 20-week EMA and the bear trend line.
• The move-up is in a 7-bar bull microchannel with bull bars closing near their highs. That means strong bulls.
• The next target for the bulls is the July 27 high, a logical area for protective stops for the bears.
• They hope to create a short covering spike above the July 27 high. Should it happen, bears that have covered will likely not sell again until another significant resistance above (probably above the all-time high next).
• If a pullback begins, the bulls want it to be sideways and shallow, with doji(s), overlapping bars and candlesticks with long tails below. 
• If there is a deep pullback, they want a reversal up from a higher low major trend reversal and the 20-week EMA to act as support.
• The bears see the strong rally simply as a retest of the July 27 high.
• They hope that the strong move is simply a buy-vacuum test of what they believe to be a 36-month trading range high.
• They want a reversal from a lower high major trend reversal (with the July 27 high) or a double top with either the September 1 or July 27 high.
• The problem with the bear’s case is that the current rally is very strong. 
• They will need to create strong bear bars with sustained follow-through selling to increase the odds of a deeper pullback. 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 may gap up on Monday. Small gaps usually close early.
• Odds continue to slightly favor the market to still be Always In Long.
• Odds also favor buyers below the first pullback from such a strong bull microchannel. 
• If there is a deeper pullback, odds slightly favor at least a small second leg sideways to up.
• Traders will see if the bulls can get another follow-through bull bar or will the market continue to trade sideways, closing as a doji or with a bear body and a prominent tail above, beginning the minor pullback phase.

S&P 500 Emini-Daily Chart

• The market opened lower and traded sideways to up for the week.
• Previously, we said that the buying pressure remains strong, and the odds continue to favor the market to still be Always In Long.
• The bulls got a reversal from a wedge bull flag (Aug 18, Oct 3, and Oct 27) and a trend channel line overshoot. 
• The move-up is strong with several big gaps that remained open and in a tight bull channel.
• They hope that the current rally will form a spike and channel which will last for many months after a pullback.
• The next target for the bulls is the July 27 high, a logical area for protective stops for the bears.
• They want a strong short covering that will fuel the move higher.
• If a pullback begins, the bulls want the 20-day EMA to act as support and form a 20-Gap-Bar buy setup.
• The bears hope that the strong rally is simply a buy vacuum retest of the July 27 high. 
• They want a strong reversal down, like the one in August 2022 following a similar strong rally.
• They want a reversal down from a lower high major trend reversal, a wedge top (Nov 22, Dec 1, and Dec 8) and a double top with the September 1 or July 27 high.
• The bears will need to create consecutive bear bars closing near their lows trading far below the 20-day EMA to increase the odds of a reversal.
• They hope that the tight trading range in the last 2 weeks will be the final flag of the move up.
• For now, the buying pressure remains very strong with bear bars not getting follow-through selling. 
• Odds continue to favor the market to still be Always In Long.
• The pullback in the last 2 weeks is sideways and shallow which indicates persistent buying and weak selling pressure.
• The odds slightly favor any pullback to be minor followed by a retest of the current leg extreme high (now December 8).

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