Big Bearish September Close For S&P 500 E-Mini Futures

The E-mini S&P 500 futures September candlestick closed below June low. The odds of an E-mini third leg down of a larger wedge pattern have increased. Bulls want a reversal higher but need at least a strong reversal bar or a micro double bottom before they would be willing to buy aggressively. Odds slightly favor the E-mini to trade at least slightly below Sept.

The Monthly E-mini chart

• The Sept monthly E-mini candlestick was a big bear bar closing near the low below June low.
• Last month, we said that odds slightly favor sideways to down and if the bears get another bear bar closing near the low, the odds of the 3^rd leg down of a larger wedge pattern increase.
• The bulls want a reversal higher from a lower low major trend reversal with the June low.
• They failed to create follow-through buying in August.
• They see the current move simply as a retest of the June low.
• However, because September is a big bear bar closing near the low, it is a weak buy signal bar for October.
• The bears want a 3^rd leg down forming a larger wedge pattern.
• They want a continuation of the measured move down to 3450 based on the height of the 12-month trading range starting from May 2021.
• Earlier, we said that the first targets for the bears are the July inside bar low, and then a retest of the June low. They reached both in September.
• Since September was a big bear bar closing near the low, odds are October would likely trade at least slightly lower.
• The E-mini may gap down at the open on Monday. Small gaps usually close early.
• There are now 2 consecutive closes below the 20-month exponential moving average, something that has not happened since February 2016.
• For now, odds slightly favor that the E-mini will trade at least slightly below October low. Bears want another big bear bar closing near the low.
• Three consecutive bear bars have not happened since 2011 on the Monthly chart. It could represent a change in the character of the market.
• Bulls want October to close with a bull body even though the E-mini may trade slightly lower first.

The Weekly S&P 500 E-Mini Chart

• This week’s E-mini candlestick was a bear bar closing bear the low below June low.
• Last week, we said that odds slightly favor sideways to down and the June low was close enough to be a magnet below.
• The bears got follow-through selling following last week’s breakout below the OO pattern (outside-outside).
• The bears got a reversal lower from around the 20-week exponential moving average in September.
• They want a strong leg down like the one in April. The bears will need to create consecutive bear bars closing near their lows, to increase the odds of a retest of the June low. They got what they wanted.
• The selloff from August was in a tight bear channel. That means strong bears.
• The bears want a breakout and a measured move down to around 3450 based on the height of the 12-month trading range starting from May 2021.
• If the E-mini trades higher, the bears want a reversal lower from a lower high around the bear trend line or the 20-week exponential moving average again.
• The bulls want a reversal higher from a double bottom major trend reversal with the June low.
• They will need to create consecutive bull bars closing near their highs to convince traders that a reversal may be underway and prevent a strong breakout below the June low.
• Because of the strong selloff, the bulls will need a strong reversal bar or at least a micro double bottom before they would be willing to buy aggressively.
• We said that the problem with the bull’s case was that the recent selloff was very strong. The sideways to up leg may only lead to a lower high.
• Since this week was a bear bar closing near the low, it is a good sell signal bar for next week.
• Next week may gap down at the open. Small gaps usually close early.
• For now, odds slightly favor sideways to down. Traders will be monitoring whether the bears get a follow-through bar following this week’s breakout below June low or if next week closes with a bull body instead.