The S&P 500 has had its biggest trailing four-month gain since 2009, but a new month is about to start. It might be a time to be aware of some potentially bearish chart patterns.
First is the bearish 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 bearish 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 bearish divergence on the MACD. July’s high of 3280 was 1.45 percent higher than the June peak. However, MACD 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 bearish 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 earnings. But now that
AAPL
,
AMZN
and
META
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 volatility picks up. Buying the first dip might be dangerous.
First is the bearish 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 bearish 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 bearish divergence on the MACD. July’s high of 3280 was 1.45 percent higher than the June peak. However, MACD 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 bearish 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 earnings. But now that
AAPL
,
AMZN
and
META
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 volatility picks up. Buying the first dip might be dangerous.