Weekly Doji on the S&P 500

The S&P 500 did not fill last week's upside gap its weekly chart. Instead, it formed a weekly Doji candle, signaling indecision in the market—particularly after Fed Chair Powell’s comment that a December rate cut was far from a foregone conclusion.

What is a doji candle?

A Doji occurs when the open and close are very close or nearly the same. It often features both an upper and lower wick, showing intraday or intraweek swings in both directions. The close near the open reflects a stalemate between buyers and sellers—neither side was able to gain control by the end of the period. The wicks (aka shadows) capture the tug-of-war: the upper shadow shows where buyers pushed prices higher before losing steam, while the lower shadow reflects where sellers drove prices down before the rebound.

A Doji itself is neither bullish nor bearish. However, within an existing uptrend—as is the case for the S&P 500—it often signals a pause or waning bullish momentum. Like the Hindenburg Omen signal (Oct 31, Straight from the Chart), a weekly Doji should be viewed as a warning rather than confirmation.

Confirmation is key after a Doji

The bulls lost momentum last week, but the burden of proof is on the bears. For this Doji to evolve into a bearish signal, downside follow-through is required—such as a weekly close below the Doji’s low. However, filling the weekly upside gap at 6814-6807 (call it 6800) on the S&P 500 would provide bearish confirmation of the Doji to suggest that last week's upside gap is an exhaustion gap. Without that confirmation uptrend remains firmly in place.

Chart 1: S&P 500 weekly candlestick chart