S&P 500 E-Mini — Bear Breakout Below Trading Range Likely This Week?

Market Overview: S&P 500 Emini Futures

The S&P 500 Emini market formed a weekly Emini bear breakout below the 23-week trading range. The bulls want a reversal from a double bottom bull flag (Jan 13 and Mar 7) or a wedge bull flag (Nov 4, Jan 13, and Feb 28). The bears must create follow-through selling following this week’s breakout below the trading range.

S&P 500 Emini Futures

The Weekly S&P 500 Emini Chart

• The last week’s Emini candlestick was a big bear bar closing in its lower half with a long tail below.
• A week earlier, we said that traders would see if the bears could create a follow-through bear bar (closing below the 20-week EMA), something they haven’t been able to do since September 2023. Or if the market would continue to trade sideways and reverse back above the 20-week EMA followed by a retest of the Jan/Feb highs instead.
• The market formed a breakout below the 23-week trading range.
• The bulls see the market as being in a broad bull channel and want the pullback to form a higher low.
• They want a reversal from a double bottom bull flag (Jan 13 and Mar 7) or a wedge bull flag (Nov 4, Jan 13, and Feb 28).
• They want a retest of the all-time high (Dec 6) followed by a breakout above.
• If the market trades lower, they hope that the September or August low will act as support.
• The bears got a reversal from a double top (Dec 6 and Jan 24), a lower high major trend reversal and a smaller double top (Jan 24 and Feb 19).
• They got a breakout below the trading range low last week.
• They want a measured move based on the height of the 23-week trading range which will take them to the 5400 area.
• The bears must create follow-through selling following the weekly breakout below the trading range.
• If the market trades higher, they want the January 13 or February 28 low to act as resistance. They see it as a retest of the breakout point.
• They want the bear trend line or the 20-week EMA to act as resistance.
• If the market trades higher, they want at least a small second leg sideways to down to retest the current leg extreme low (now Mar 7).
• Since the last week’s candlestick is a bear bar closing in its lower half, it can be a sell signal bar for the last week albeit weaker (long tail below).
• The bears need to create follow-through selling to increase the odds of a measured move down.
• Traders will see if the bears can create follow-through selling below the January 13 low.
• If there is a pullback (bounce), traders will see the follow-through buying. If it lacks strong follow-through buying, the odds of another sideways to down leg will increase.

The Daily S&P 500 Emini Chart

• The market broke below the trading range low on Tuesday but lacked follow-through selling. The Emini then gapped lower on Thursday. Friday traded lower but reversed into a bull bar closing near its high.
• Previously, we said the bears must do more to convince traders they are back in control by creating a couple of strong consecutive bear bars to increase the odds of testing the January 13 low.
• The bulls see the market trading in a broad bull channel and want the market to form a higher low.
• They want a reversal from a double bottom bull flag (Jan 13 and Mar 7), a wedge bull flag (Nov 4, Jan 13, and Feb 28) and a parabolic wedge (Feb 28, Mar 4, and Mar 7).
• They want a failed breakout below the trading range. At the least, they want a minor pullback testing the 20-day EMA.
• They hope that the 200-day EMA will act as support.
• The bears got a reversal from a lower high major trend reversal, a double top (Dec 6 and Jan 24), and a smaller double top (Jan 24 and Feb 19).
• They hope to get a bear leg to retest the January 13 low followed by a breakout below. They got it last week.
• If there is a pullback, they want the January 13/February 28 low, the bear trend line or the 20-day EMA to act as resistance, followed by a second leg sideways to down to retest the current leg extreme low (now Mar 7).
• The bears need to create follow-through selling below the January 13 low to increase the odds of a measured move (based on the height of the 23-week trading range) which will take them to around 5400.
• So far, the move down is in a tight bear channel which means persistent selling.
• The selling pressure in the move down is stronger (consecutive bear bars, bigger bear bars) than the weaker buying pressure (bull bars with no follow-through buying).
• Because of the parabolic wedge (Feb 28, Mar 4, and Mar 7) and climactic selloff, the market may form a minor pullback (bounce) probably early this week.
• Traders will see the follow-through buying of the pullback. If it is weak and lacks strong follow-through buying, stalling around the bear trend line or the 20-day EMA, the odds of another sideways to down leg will increase.
• The candlestick in the move down (since Feb 19) has a lot of overlapping ranges. The bears are not yet as strong as they hope to be.
• If there is a pullback, odds favor at least a small second leg sideways to down to retest the current leg extreme low (now Mar 7).

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