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No E-mini Follow-through Selling

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Market Overview: S&P 500 E-mini Futures

There was no E-mini follow-through selling on the weekly chart, closing as an inside bull doji. The bears must create consecutive bear bars closing near their lows to show they are back in control. The bulls want the pullback to be weak and sideways followed by a retest and breakout above the all-time high.

S&P500 E-mini futures

The Weekly S&P 500 E-mini chart

E-mini Weekly - No FT Selling, Minor Pullback, No E-mini Follow-through Selling
  • This week’s E-mini candlestick was an inside doji, closing slightly above the middle of its range with long tails.
  • Last week, we said traders would observe whether the bears could create a follow-through bear bar (something they couldn’t do since the April low), or if the market would lack follow-through selling again.
  • The bears could not create a follow-through bear bar (again).
  • They want a reversal from a wedge pattern (May 19, Jul 31, and Oct 9) and a buy climax.
  • They want a retest of the 20-week EMA.
  • The problem with the bear’s case is that they could not create sustained follow-through selling on the weekly chart since the April 7 low.
  • They must create consecutive bear bars closing near their lows to show they are back in control.
  • The bulls reached the 6800-level target in October.
  • They view the current move as a pullback and hope the September 25 low area will act as support.
  • They want the pullback to be weak and sideways (overlapping candlesticks, doji(s), bull bars, long tails below candlesticks).
  • They want a retest and breakout above the all-time high, followed by a resumption of the trend.
  • If the market trades lower, they want the 20-week EMA or the September 2 low area to act as support.
  • The move up since the April 21 low is in a tight bull channel, indicating strong bullish momentum.
  • The move is slightly climactic and overbought. The market may need to form a TBTL (Ten Bars, Two Legs) pullback before attempting to resume the trend.
  • The bears need to do more by creating strong consecutive bear bars to show they are back in control. Without that, traders will not be willing to sell aggressively.
  • The move from the September 2 low was in a 5-bar bull microchannel, indicating persistent buying activity.
  • There could be buyers below the first pullback attempting a reversal (even if it only forms a lower high). The market formed a lower high retest this week (Oct 15).
  • Due to the climactic nature of the move, buying at current levels is increasingly risky. The risk of a two-legged minor pullback is increasing. The sideways-to-down pullback phase may have already begun, albeit not yet strongly.
  • This week’s candlestick is a doji closing around the middle of its range and around the middle of the 5-week trading range. It can be an area of balance and a magnet.
  • For now, traders will see if the bears can create some decent follow-through selling in the weeks ahead, something they couldn’t do since the April low.
  • Or will the pullback phase remain mostly sideways and lacking follow-through selling?

The Daily S&P 500 E-mini chart

E-mini Daily - Minor PB, Bears Need Follow-through Selling
  • The market gapped up on Monday, testing the 20-day EMA. Tuesday formed a retest of the October 10 low but reversed into a bull bar. The market traded sideways within the October 10 range for the week.
  • Last week, we said traders would observe whether the bears could create sustained follow-through selling, or if the market would trade slightly lower, but stall and form a retest of the October 9 high (even if it only forms a lower high) instead.
  • The market formed a retest of the October 9 high, creating a lower high (Oct 15).
  • The bulls reached the 6800-level measured move and round number target in October.
  • They see the current move as a pullback. They want it to be weak and lacking follow-through selling (overlapping candlesticks, doji(s), long tails below candlesticks).
  • They want a retest and breakout above the October 9 high, followed by a resumption of the trend.
  • If the market trades lower, they want the September 2 low or the 100-day or 200-day EMA area to act as support, forming a major higher low.
  • The bears want a reversal from a large wedge pattern (May 19, Jul 31, and Oct 9) and an embedded wedge (Aug 13, Sept 22, and Oct 9).
  • They want a TBTL (Ten Bars, Two Legs) pullback lasting a few weeks.
  • The next targets for the bears are the 100-day EMA and the 200-day EMA.
  • They want the 20-day EMA to act as resistance, forming a lower high and a small double top (Oct 9 and Oct 15).
  • If the market trades higher, they want a reversal from a higher high major trend reversal and a failed breakout.
  • They must create consecutive bear bars closing near their lows, trading far below the 20-day EMA and the bull trend line, indicating they are back in control.
  • The move from the April 21 low is in a tight bull channel, indicating strong buying momentum.
  • The market is slightly overbought and climactic. It may need to form a two- or three-legged pullback to alleviate the overbought condition before resuming the trend.
  • The pullback phase is currently underway, albeit still weak.
  • The bears must create strong follow-through selling to demonstrate they are firmly in control, something they have been unable to do since the April 21 low.
  • For now, traders will observe whether the bears can create sustained follow-through selling.
  • Or will the pullback continue to trade sideways, lacking in follow-through selling instead?

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