Are Stocks Forming a Major Topping Pattern?

Paul-Rejczak Paul Rejczak Jul 08, 2025

The S&P 500 pulled back - just a correction of recent gains?

Stock prices pulled back on Monday, with the S&P 500 Index closing 0.79% lower and retracing most of its Wednesday–Thursday rally. On Thursday, the index reached a new record high of 6,284.65, but yesterday it traded as low as 6,201.00. Technically, this appeared to be a pullback toward the 6,200 level. The market reacted to renewed tariff-related concerns.

This morning, the S&P 500 is expected to open 0.1% higher, as indicated by futures contracts. The market appears to be entering a short-term consolidation.

Investor sentiment has improved significantly, as reflected in Wednesday’s AAII Investor Sentiment Survey, which reported that 45.0% of individual investors are bullish, while 33.1% are bearish.

The S&P 500 is fluctuating following its recent advances, as the daily chart indicates.

Are Stocks Forming a Major Topping Pattern? - Image 1

 

S&P 500 Futures - Short-Term Consolidation

This morning, the S&P 500 futures contract is trading near the 6,280 level after rebounding from yesterday’s intraday low of around 6,247. Resistance remains in the 6,300–6,320 range, while support is near 6,250.

Markets remain highly sensitive to geopolitical developments and could stay volatile in the near term.

Are Stocks Forming a Major Topping Pattern? - Image 2

 

Conclusion

Stocks are likely to open flat today, with the S&P 500 moving sideways after rebounding from the 6,200 level. The index remains near its all-time high, with no clear bearish signals at this time. However, a more pronounced round of profit-taking could still occur in the near term.

Last Tuesday, I noted “I think that in the short term, overbought technical conditions may lead to a period of consolidation or a mild pullback. However, no clear bearish signals are currently evident”. That outlook remains valid.

Here’s the breakdown:

  • The S&P 500 has entered a phase of uncertainty and consolidation, pulling back to around 6,200 on Monday.
  • The recent rally extended gains for those who bought based on my Volatility Breakout System.
  • There are no clear bearish signals yet, but a deeper downward correction is not out of the question at some point.
     

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Thank you.

Paul Rejczak
Stock Trading Strategist

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