ES Weekly Outlook: Can the Santa Rally Carry ES Back to All TimeMacro Backdrop and Sentiment Over the Past Month
Over the past month, the macro narrative for ES has been defined by a gradual shift from momentum driven optimism to a more cautious and selective risk environment. Coming out of October, equities were supported by easing financial conditions, strong earnings from mega cap technology, and continued enthusiasm around productivity gains tied to AI investment. That optimism pushed ES to fresh all time highs by the end of October.
As November progressed, sentiment became more balanced. Market participants began to reassess forward growth expectations, the path of monetary policy, and the sustainability of stretched valuations. Rather than a sharp risk off move, the tape transitioned into a rotational regime where participants became increasingly responsive around well defined value areas.
This shift has resulted in slower tempo, overlapping value, and greater sensitivity to technical references rather than headline driven trend continuation. The market has increasingly rewarded patience, context, and execution around key levels as opposed to chasing momentum.
What the Market has done
• From the all time highs made at the end of October, the market rotated lower toward the 6605 area, which aligned with daily support. Responsive buyers entered aggressively at this level and successfully defended the level.
• Following the responsive buying, price auctioned higher toward the 6975 area, which aligned with daily resistance and the 5 November weekly value area high, where sellers responded and capped further upside.
• During the past week, the market broke below the first two weeks of December’s range and the composite value area, signaling a short term loss of acceptance at higher prices.
• Price then auctioned lower toward the 6780 area, which aligned with the 24 November weekly VPOC, where buyers once again responded and defended the level.
• Responsive buying from 6780 drove the price back higher toward the 6885 area, which sits near the 12 December weekly settlement and the two week composite value area low, reinforcing the broader balanced structure.
What to expect in the coming week
The key reference to frame the coming week is the previous week’s settlement at 6888.50.
Bullish scenario
• If the market can accept above 6888.50, expect an auction higher toward the 6970 area, which aligns with daily resistance, the 5 November weekly value area high, and the weekly 0.5 standard deviation high.
• Sellers are expected to respond in the 6970 area and attempt to rotate price back down
• If sellers fail to defend this area, continuation higher toward 7012 becomes likely, which aligns with all time highs and the weekly 1 standard deviation high.
Bearish scenario
• If the market is unable to accept above 6888.50, expect a move lower toward the 6827 area, which aligns with the previous week’s value area low and the weekly 0.5 standard deviation low.
• Buyers are expected to respond at 6827 to bid prices back up through value.
• If buyers fail to hold 6827, expect a continuation lower toward the 6780 area, which aligns with the previous week’s low, the 24 November weekly VPOC, and the weekly 1 standard deviation low.
Neutral scenario
• If the market is unable to extend meaningfully beyond 6970 on the upside or 6827 on the downside, expect the market to remain balanced and rotational.
• In this scenario, value is likely to continue shifting modestly higher as the market awaits the next catalyst.
Conclusion
ES remains in a broader balance regime where responsive trade dominates and initiative activity has struggled to sustain follow through. Until the market can show clear acceptance above resistance or below support, patience and level based execution remain critical. The previous week’s settlement at 6888.50 will act as the primary decision point this week that helps determine whether the market seeks higher prices, deeper balance, or continued two way trade. If seasonal Santa rally dynamics come into play, they may act as the catalyst that allows the market to regain initiative strength and auction back toward all time highs.
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Disclaimer: This is not financial advice. Analysis is for educational purposes only; trade your own plan and manage risk.
