S&P 500 E-Mini: Bulls Need Follow-through Buying This Week

The bulls need follow-through buying to increase the odds of a breakout into new all-time highs territory and a continuation of the bull trend. The bears want a reversal from a double top (Dec 6) and a lower high major trend reversal. If the market trades higher, they want a failed breakout above the all-time high followed by a higher major trend reversal.

The Weekly S&P 500 Emini Chart

• This week’s Emini candlestick was a follow-through bull bar closing near its upper half with a small tail above.
• Last week, we said the market may trade at least a little higher. Traders would see if the bulls could create a follow-through bull bar and if they do, the odds of a retest of the all-time high will increase. Or if the market would trade slightly higher but close with a long tail or a bear body instead.
• The bulls see the market as being in a broad bull channel and want the market 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 want a breakout into new all-time highs followed by a measured move based on the height of the recent 18-week trading range.
• They must continue to create sustained follow-through buying to increase the odds of the bull trend resuming.
• The bears got a two-legged pullback but the follow-through selling below the 20-week EMA was limited.
• They see the current move as a retest of the prior trend extreme high (Dec 6) and a bull leg within the 18-week trading range.
• They want a reversal from a double top (Dec 6) and a lower high major trend reversal.
• If the market trades higher, they want a failed breakout above the all-time high followed by a higher major trend reversal.
• Since this week’s candlestick is a bull bar closing in its upper half, it is a buy signal bar for next week.
• The December 6 high could be an area of resistance.
• Traders buying here could be buying near the high of the 18-week trading range, which is not an ideal setup.
• For now, the market may still trade at least a little higher.
• Traders will see if the bulls can create a follow-through bull bar breaking into new all-time territory.
• Or will the market stall around the December 6 high area instead?
• Odds slightly favor any pullback to be minor and not lead to a reversal.

The Daily S&P 500 Emini Chart:

• The market traded higher for the week in a tight bull channel with gaps.
• Last week, we said the market may trade slightly higher early in the week. Traders would see if the bulls could create follow-through buying breaking far above the January 6 or December 26 high, or if the market would trade slightly higher but stall, forming a lower high major trend reversal instead.
• The market traded above the December 26 high and tested near the all-time high.
• 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) from a wedge bull flag (Dec 20, Jan 2, and Jan 13) and a double bottom bull flag (Nov 4 and Jan 13).
• The move up since January 13 is in the form of a 9-bar bull microchannel. That means persistent buying. Odds favor buyers below the first pullback.
• The bulls must create a strong breakout above the December 6 high with follow-through buying to increase the odds of a trend resumption.
• The bears got a three-legged pullback testing near the October/November lows.
• They see the current move as a retest of the prior trend’s extreme high.
• They hope that the strong move up (from Jan 13) is a buy vacuum and a bull leg within the small trading range.
• They want a reversal from a lower high major trend reversal and a double top.
• If the market trades higher, they want a failed breakout above the all-time high (Dec 6) and a reversal from a higher high major trend reversal.
• For now, the market may trade slightly higher next week. Odds slightly favor buyers below the first pullback from the 9-bar bull microchannel.
• Traders will see if the bulls can create more follow-through buying breaking far above the all-time high (Dec 6).
• Or will the market trade slightly higher but stall around the December 6 high area instead?
• The odds slightly favor any pullback to be minor and not lead to a reversal.