Major warning signs are emerging on the S&P 500 chart that could signal a significant correction or market drop if triggered soon in 2025. Technical analyst Charlie Burton, discussing with Alessio, points to a large bearish engulfing candle on the S&P 500 weekly chart—a pattern suggesting a potential shift from bullish momentum to a deeper correction.
Key factors to watch include:
If the S&P 500 price falls below last week's low, it will confirm the bearish engulfing pattern and likely trigger a strong sell signal.
A critical support level to watch is the green horizontal line—a former resistance throughout 2024 and early 2025. Breaching this level could open the door to much deeper losses.
Market breadth is weakening; the recent gains were led by a few large tech stocks, while small caps and value stocks lag behind.
Volatility indicators like the VIX spiked recently after a long period of calm, indicating rising fear and uncertainty.
Seasonal trends: August and September are historically weaker months for equities, and the market currently faces reduced liquidity, which can exacerbate price swings.
Additional caution comes from other technical signs:
The S&P 500 recently broke below its 20-day moving average, ending a 72-day winning streak.
Momentum indicators like RSI and MACD are signaling fading strength and potential transitions to bearish momentum.
In summary, while the market recently hit new highs, these multiple technical warnings suggest that investors should be prepared for possible turbulence ahead. If key support levels break, the road could lead to a broader stock market correction.
In short:
Bearish engulfing weekly pattern on S&P 500 is a red flag.
Breach of key support levels could trigger sell-off.
Market breadth weakness and rising volatility add to risk.
Seasonal headwinds in August and September often bring increased volatility and corrections.
Investors should closely monitor technical levels and be cautious with exposure.
Share this to alert fellow investors about the warning signs on the market chart! What’s your strategy if a correction hits? Comment below!Major warning signs have emerged on the S&P 500 chart that could signal a significant market correction or drop if triggered soon in 2025. Technical analyst Charlie Burton highlights a large bearish engulfing pattern forming on the weekly S&P chart. If the index closes below last week's low, this would confirm the pattern and potentially trigger a strong sell-off.
Key points of concern include:
Breach of critical horizontal support lines that previously acted as resistance through 2024 and early 2025.
Weakening market breadth, where few mega-cap tech stocks lead gains but small caps and value sectors lag.
Rising volatility indicators like the VIX spiking after a long period of calm.
Seasonal factors: August and September historically bring weaker and more volatile markets with lower trading volumes.
Other technical hints show momentum fading after a strong rally:
The 20-day moving average was recently broken, ending a 72-day winning streak.
RSI and MACD are indicating bearish signals.
Investors should watch these key levels closely and prepare for potential volatility ahead, as a failure to hold support could open the door to deeper losses across the broader market.
In brief, while markets recently hit new highs, the charts warn of underlying fragility that could lead to a substantial correction if certain triggers are hit.
Share to keep your network informed about possible market risks!