SPX forms a bearish engulfing candle again

Aug 4

Last week, the S&P 500 Index (SPX) printed a bearish engulfing candle on the weekly chart. This candlestick pattern occurs when a larger red (bearish) candle completely "engulfs" the body of the previous green (bullish) candle. It is a classic reversal signal, often indicating that the momentum may be shifting from bullish to bearish.

What makes this significant is the recurring pattern we've observed:

At each of the last three market tops, the SPX formed a bearish engulfing pattern—and each time, this was followed by a notable correction or pullback.

The current candle mirrors those past setups almost identically, suggesting that the market may again be vulnerable to a short-term decline.

However, the big question remains:
"Will this time be different?"

In short, the bearish engulfing pattern is a warning sign—especially given its historical reliability at tops—but confirmation is key.








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Aug 20

Note

Confirmation did not come next week that negates the downside view...Apologies for the late update