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Weekly E-mini Bears Need Follow-through Selling

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Market Overview: S&P 500 E-mini Futures

The weekly E-mini bears need follow-through selling following this week’s outside bear bar. They are looking for a second leg sideways to down to retest the November 21 low. If the market trades lower, bulls want the 20-week EMA to act as support, forming a wedge bull flag, with the first two legs being Oct 10 and Nov 21.

S&P500 E-mini futures

The Weekly S&P 500 E-mini chart

E-mini Weekly - Bears Need FT Selling, Bulls Want 2nd Leg, Weekly E-mini Bears Need Follow-through Selling
  • This week’s E-mini candlestick was an outside bear bar closing in its lower half, with a small tail below.
  • Last week, we said traders would watch whether bulls could create more follow-through buying, or whether the market would stall near the November 12 high.
  • So far, the market is forming a lower high and stalling around the November 12 high area.
  • Bears created the first streak of four consecutive bear bodies since February, testing the 20-week EMA in November.
  • They see the current rally as a retest of the prior trend extreme high (Oct 29) and want it to be weak — with overlapping bars and poor follow-through.
  • They hope the market stalls near the November 12 high area, forming a double top bear flag (Nov 12 and Dec 11) and a lower high major trend reversal.
  • They are looking for a second leg sideways to down to retest the November 21 low.
  • If the market trades higher, bears want a failed breakout above the October 29 high and a higher high major trend reversal.
  • Bears need strong follow-through selling to increase the odds of testing the 20-week EMA.
  • Bulls see the recent selloff (Nov 21) as a pullback that has alleviated overbought conditions.
  • Bulls want a retest and breakout above the October 29 high, followed by a resumption of the bull trend from a double bottom bull flag (Oct 10 and Nov 21).
  • If the market trades lower, bulls want the 20-week EMA to act as support, forming a wedge bull flag, with the first two legs being Oct 10 and Nov 21.
  • Bulls need strong follow-through buying breaking above the October 29 high to increase the odds of trend continuation.
  • The recent pullback to the 20-week EMA (Nov 21) has traders asking whether overbought conditions have been sufficiently worked off.
  • Traders will watch the strength of the retest of the all-time high. Will it be strong, with follow-through buying pushing into new all-time highs, or weak — with overlapping bars, long upper tails, and dojis — forming a lower high instead?
  • For now, traders will watch whether bears can create a follow-through bear bar, or whether the market lacks follow-through selling and instead retests the all-time high in the weeks ahead.

The Daily S&P 500 E-mini chart

E-mini Daily - LH MTR, DT Bear Flag, Bears Need FT Selling
  • The market traded slightly higher on Wednesday, with some follow-through buying on Thursday. Friday traded lower to retest the 20-day EMA.
  • Last week, we said traders would watch whether bulls could generate a strong retest and breakout above the all-time high (Oct 29), or whether the move would stall around the November 12 high, followed by a second leg sideways to down to retest the November 21 low.
  • So far, the market is stalling around the November 12 high area.
  • Bulls hope the November 21 pullback has relieved overbought conditions.
  • They got a retest near the all-time high from a wedge bull flag (Nov 7, Nov 18, Nov 21) and a large double bottom bull flag (Oct 10 and Nov 21).
  • Bulls want the 20-day EMA to act as support, forming a higher low relative to November 21 and a wedge bull flag, with the first two legs on Oct 10 and Nov 21.
  • Bulls must create a strong retest and breakout above the October 29 high with sustained follow-through buying to increase the odds of trend resumption.
  • Bears got a pullback from a large wedge pattern (May 19, Jul 31, Oct 29) and a lower high major trend reversal (Nov 12).
  • Bears see the current rally as a retest of the prior trend extreme high (Oct 29) and want it to stall around the November 12 high, forming a double top bear flag (Nov 12 and Dec 11) and a larger lower high major trend reversal.
  • If the market trades higher, bears want a failed breakout above the all-time high (Oct 29) and a reversal from a higher high major trend reversal.
  • Bears must produce consecutive strong bear bars closing near their lows and pushing far below the 20-day EMA to signal decisive control.
  • Since September, the market has made new all-time highs with increasingly overlapping ranges, a sign of more two-sided trading and reduced momentum.
  • Traders will watch whether bears can create follow-through selling below the 20-day EMA, or whether the move stalls around the 20-day EMA and is followed by a second leg sideways to up instead.

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