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E-mini Bear Leg Testing the November Low

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Market Overview: S&P 500 E-mini Futures

The market is forming a S&P 500 E-mini bear leg testing the November low. Bears want a strong breakout below the tight trading range and the November low, followed by a measured move toward 6,500 based on the height of the 13-week trading range. If the market breaks below the November low, bulls want the move to be brief and lack follow-through selling, resulting in a failed breakout.

S&P500 E-mini futures

The Weekly S&P 500 E-mini chart

E-mini Weekly - Larger Trading Range, Test November Low
  • This week’s Emini candlestick was a bear bar closing near its low with a long tail above.
  • Last week, we said traders were watching whether bears could generate follow-through selling. If the market traded higher, traders would watch whether it stalled around the 20-week EMA or the February 25 high area and formed another lower high relative to the January 28 all-time high.
  • The market opened lower and reversed to test the 20-week EMA early in the week, followed by sideways to down trading, closing near the week’s low.
  • Bears want a reversal from a wedge top (December 11, December 26, January 12) and a lower high major trend reversal (February 25).
  • Bears want a strong breakout below the tight trading range and the November low, followed by a measured move toward 6,500 based on the height of the 13-week trading range.
  • They need strong follow-through selling breaking decisively below the November low to shift the market to Always In Short.
  • If the market trades higher, bears want the 20-week EMA to act as resistance, forming a lower high.
  • Bulls see the current move as forming a large double bottom bull flag (November 21 and March 13).
  • They see the current move as a sell vacuum test of the November low within the larger trading range.
  • Bulls want the November 21 low to act as support. If the market breaks below the November low, they want the move to be brief and lack follow-through selling, resulting in a failed breakout.
  • Bulls need consecutive strong bull bars to show they have regained control.
  • So far, the market has broken below the 13-week tight trading range and the 20-week EMA with some follow-through selling.
  • The last two candlesticks overlap their prior bars by about 50%, indicating the move is moderate in strength but not yet decisively strong.
  • Traders are watching whether bears can generate a strong breakout below the November low with sustained follow-through selling next week.
  • Or whether the market finds support around the November low area, followed by a pullback to retest the middle of the trading range around the 20-week EMA in the weeks ahead.
  • Traders are watching whether the market is in a multi-month distribution phase or forming a large bull flag ahead of another leg up.

The Daily S&P 500 E-mini chart

E-mini Daily - Larger Trading Range, Overlapping Range
  • The market opened lower around the 200-day EMA and reversed higher early in the week, but the move lacked follow-through buying. The market then traded sideways to down to retest Monday’s low.
  • Last week, we said traders were watching whether bears could generate further follow-through selling, or whether bulls could produce consecutive strong bull bars back into the tight trading range.
  • The market traded lower this week, but like the prior week, the candlesticks have overlapping ranges, indicating the breakout below the 13-week tight trading range is moderate in strength and not yet decisively strong.
  • Bulls see the current move as a bear leg testing the larger trading range low (November 21).
  • They want a reversal from a large double bottom bull flag (November 21 and March 13), a wedge pattern (March 3, March 9, and March 13), and a trend channel line overshoot.
  • Bulls want the November 21 low or the 200-day EMA to act as support.
  • If the market trades lower, they want the move to be brief and lack follow-through selling, resulting in a failed breakout below the November low.
  • Bulls need consecutive strong bull bars to show they have regained control.
  • Bears want a strong breakout below the November low, followed by a measured move toward 6,500 based on the height of the 13-week trading range.
  • They want the 20-day EMA to act as resistance, which appears to be the case so far.
  • If the market trades higher, bears want the March 10 high to act as resistance, forming a lower high and a double top bear flag.
  • Bears need consecutive strong bear bars breaking far below the November 21 low and the 200-day EMA to increase the odds of a measured move down and flip the market into Always In Short.
  • The market broke below the 13-week tight trading range, but the lack of consecutive strong bear bars indicates bears are not yet decisively strong.
  • The last few weeks have traded lower but with overlapping ranges, forming trending trading ranges.
  • Traders are watching whether bears can generate a strong breakout below the November low and the 200-day EMA with sustained follow-through selling.
  • Or whether the market stalls around the November low and the 200-day EMA area instead.
  • If the market trades higher but continues forming slightly lower highs—with prominent bear bars, weak bull bars, and tails above—stalling around the 20-day EMA, the odds of a downside breakout increase.
  • Traders are watching whether the market is in a multi-month distribution phase or forming a large bull flag ahead of another leg up.

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