S&P 500 E-Mini to Test All-Time Highs?

Market Overview: S&P 500 Emini Futures

The monthly chart is forming an S&P 500 Emini test all-time high. The bulls hope that the market will reach the all-time high and break out above. The bears want a reversal from a lower high major trend reversal or a double top and a large wedge pattern (Dec 2, July 27, and Feb 2) forming at the trend channel line area.

S&P 500 Emini Futures

• The January monthly Emini candlestick was another consecutive bull bar with a prominent tail above.
• Last month, we said that the odds slightly favor January to trade at least a little higher. The all-time high is close enough and could be tested in January.
• January traded higher but did not reach the all-time high.
• Previously, the bulls managed to create a tight bull channel from March to July. 
• That increases the odds of at least a small second leg sideways to up after the July to October pullback. The second leg up is currently underway.
• February has traded above the January high. The bulls hope that the market will reach the all-time high and break out above.
• The bears see the current rally as a retest of the January 2022 all-time high and want a reversal from a lower high major trend reversal or a double top.
• They also see a large wedge pattern (Dec 2, July 27, and Feb 2) forming at the trend channel line area.
• Because of the strong rally in the last 3 months, they will need a strong signal bar or a micro double top before traders would be willing to sell more aggressively.
• If February stalls around the January high area or slightly above, it can form a micro double top.
• Since January closed above the middle of its range, it is a buy signal bar albeit weaker.
• For now, odds slightly favor February to trade at least a little higher which it has done. 
• The market remains Always In Long and the bull trend remains intact (higher highs, higher lows).
• However, the rally has also lasted a long time and is slightly climactic. 
• A minor pullback can begin within a few months before the market resumes higher.

• This week’s Emini candlestick was an outside bull bar closing near its high with a long tail below.
• Last week, we said that the odds slightly favor the market to still be Always In Long. Traders will see if the bull can create another follow-through bull bar and resume the move higher.
• The bulls continue to get follow-through buying above the December 28 high.
• The move up since October is in a tight bull channel. That means strong bulls.
• The next target for the bulls is the all-time high. 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. 
• Swing bulls would continue to hold their long position established at lower prices believing any pullback likely to be minor and the market has transitioned into a bull channel phase.
• The bears hope that the strong rally is simply a buy-vacuum test of what they believe to be a 38-month trading range high.
• They want a reversal from a lower high major trend reversal (with the all-time high) and a large wedge pattern (Feb 2, July 27, and Feb 2) from around the trend channel line area.
• They hope to get at least a TBTL (Ten Bars, Two Legs) pullback. 
• The problem with the bear’s case is that the rally is very strong. The only bear bar in the rally had no follow-through selling.
• They would need a strong reversal bar, a micro double top or a reasonable signal bar for a Low 2 setup before they would think to sell aggressively.
• The bears hope next week will form an inside bear bar, forming an ioi (inside-outside-inside) followed by a breakout below, beginning the TBTL pullback phase.
• If the market trades higher, the bears want the Emini to stall around the trend channel line area or the all-time high area.
• Since this week’s candlestick is an outside bull closing near its high, it is a buy signal bar for next week.
• Sometimes the candlestick after an outside bar is an inside bar, forming an ioi (inside-outside-inside) pattern, a breakout mode pattern.
• While the market continues to be Always In Long, the rally has lasted a long time and is slightly climactic.
• Traders expect a minor pullback (even if it lasts for weeks) and are looking for signs of this. 
• Traders will see if the bull can create another follow-through bull bar and resume the move higher. Or will the market stall around the trend channel line area?