Weekly E-mini Pullback

Market Overview: S&P 500 E-mini Futures

The market is forming a weekly E-mini pullback. Bears still need strong consecutive bear bars before traders will sell aggressively. Bulls want a retest and breakout above the October 29 high, followed by a resumption of the trend.

S&P500 E-mini futures

The Weekly S&P 500 E-mini chart

• This week’s E-mini candlestick was a bear bar closing below the middle of its range with a long tail below.
• Last week we said traders were watching whether bears could finally create a follow-through bear bar — something they haven’t done since the April low — or if the market would make a new all-time high but begin forming prominent tails or bear bodies.
• Bears managed to create a follow-through bear bar this week.
• They want a reversal from a wedge top (May 19, Jul 31, Oct 29).
• They see the recent 6-week trading range as a possible final flag in the rally and want a pullback to the October 10 low area or the 20-week EMA.
• They are looking for a TBTL (Ten Bars, Two Legs) pullback lasting a few weeks.
• They will need consecutive bear bars closing near their lows to show they are in control.
• Bulls broke above the 6-week trading range, reaching and exceeding the 6,900 round number target recently.
• They see the current move as a pullback and want it to be weak, with limited follow-through selling, like all recent pullbacks.
• They want the October 10 low and 20-week EMA to act as support.
• They want a retest and breakout above the October 29 high, followed by a resumption of the trend.
• The move up since the Apr 21 low has been a tight bull channel, showing strong bullish momentum.
• The rally is slightly climactic and overbought; it may need to form a pullback before resuming higher.
• Bears still need strong consecutive bear bars before traders will sell aggressively.
• The long tail below this week’s candlestick shows bears are not yet strong.
• Traders will watch if bears can create sustained follow-through selling — something they haven’t done since April — or if the pullback will lack follow-through selling (overlapping candlesticks).
• For now, odds slightly favor any pullback being minor.

The Daily S&P 500 E-mini chart

• The market traded sideways to down for the week. Friday traded lower but reversed into a bull bar closing near its high with a long tail below.
• Previously, we said traders were watching whether bulls could create sustained follow-through buying and resume the trend, or if the market would stall near the recent highs and pull back toward the 20-day EMA or the Oct 10 low.
• Recently, the market traded slightly higher but started to stall, followed by a pullback lower this week.
• Bulls reached and exceeded the 6,900-level round number target in October.
• They see the current move as a pullback within the bull trend and want it to remain weak and sideways (overlapping candlesticks, dojis, long tails below bars).
• They want the October 10 low or the bull trend line to act as support, forming a double bottom bull flag (Oct 10 and Nov 7).
• They want a retest and breakout above the October 29 high followed by a resumption of the trend.
• Bears want a reversal from a large wedge pattern (May 19, Jul 31, Oct 29) and a higher-high major trend reversal.
• If the market trades higher, bears want it to stall below the October 29 high, forming a lower high major trend reversal.
• They must create strong consecutive bear bars closing near their lows, trading far below the 20-day EMA and the October 10 low to indicate they are in control.
• The move from the April 21 low remains in a tight bull channel, showing strong buying momentum.
• The market is slightly overbought and climactic, but until bears can create strong consecutive bear bars, traders will not sell aggressively.
• Traders will watch whether bears can create more follow-through selling. If the market trades higher, traders will watch if the move forms a lower high followed by a second leg sideways to down.
• Or will the pullback lack strong follow-through selling, followed by a strong retest of the October 29 high instead?
• For now, odds slightly favor any pullback being minor.

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