S&P 500 E-Mini Futures (ES) has mostly moved sideways with a modest upward tilt since October 2025. A short-term cycle from the 21 November 2025 low is still unfolding as a five-wave Elliott Wave pattern.
Wave 1 ended at 7043, which is the index’s all-time high. Price then dropped in a zigzag, with wave ((a)) ending at 6864.5 and wave ((b)) ending at 7011.5.
Wave Structure And Key Levels
Wave ((c)) fell to 6791.6, completing wave 2 at a higher degree. From 6791.6, the index turned higher into wave 3, but a break above 7043 is still needed to rule out a larger double correction.
From the wave 2 low, wave (i) rose to 6925.75, followed by wave (ii) down to 6828.5. In the near term, the 6791.6 pivot is the key level, with pullbacks expected to hold within the 3, 7, or 11 swing sequence.
Price action remains upward-biased, but confirmation depends on a sustained move above 7043.
Based on the analysis from late 2025, we see the S&P 500 E-Mini futures are in a constructive but unconfirmed uptrend. The market’s sideways action since the peak at 7043 has built a base for a potential third wave higher. The key for traders now is the pivot at 6791.6, which must hold to keep this bullish outlook valid.
Options Positioning For Breakout And Support
Considering this setup, selling out-of-the-money put credit spreads with a short strike below the 6791.6 pivot is a viable strategy for the coming weeks. With the VIX having recently settled near 14, premiums are reasonable for strategies that profit from time decay and the market staying stable or moving higher. This approach aligns with the view that dips should find support as long as the critical low remains intact.
For those anticipating the confirmed breakout, accumulating long positions through bull call spreads targeting a move above 7043 makes sense. This defines risk while positioning for the significant upward extension that would characterize a third wave. A decisive close above the old high would likely attract a fresh wave of buying, accelerating the move.
This technical structure is supported by recent fundamental data from January 2026, which showed core inflation moderating to 2.8% and steady, but not overheating, job growth of 195,000. These figures reduce the likelihood of surprise central bank action and support the market’s underlying strength. Looking back at similar consolidations, such as the one in Q2 2023, a period of quiet sideways movement often precedes a strong and sustained trend.
However, discipline remains paramount, and a breach of the 6791.6 pivot would invalidate this entire bullish wave count. Such a break would suggest a larger double correction is unfolding, forcing a rapid shift to a defensive or bearish stance. In that scenario, traders would need to close bullish positions and consider buying puts for downside protection.
