First is the gap from February 24. The index tested into it last week but stalled. This is also close to the year-to-date breakeven line of 3231.
Next, the index had a outside day on July 23. It’s yet to close above that potential reversal pattern. (The Nasdaq-100 had a similar pattern on July 13, which it’s also failed to break.)
Another potential issue with the S&P 500 is divergence on the . July’s high of 3280 was 1.45 percent higher than the June peak. However, made a lower high. In and of itself, this isn’t hugely important. But when it occurs at a potentially key zone like February’s gap, it can be more significant.
Finally, there is the question of sentiment and news. Stocks have been running on hopes of the economy reopening and strong technology . But now that Apple , Amazon.com and Facebook have reported, there may be fewer catalysts. This creates risks of a “sell the news” trend going forward.
Traders may want to be cautious if a breakdown occurs in August and picks up. Buying the first dip might be dangerous.