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Simple Repeating Top Pattern in the SP500

Is the market topping or is this just another in a string of smaller “repeat top” patterns for the S&P 500?

Let’s take a look at a recently repeating pattern and chart the levels to watch if history does indeed repeat.

SPX S&P 500 Top Reversal Retracement

I highlighted three similar periods where the following factors developed on the chart:

  • Retest of prior high (slight new “all time” high)
  • Negative momentum divergence
  • Retracement or “sell-off” against the new (weak) high

One could also add Negative Breadth and Volume Divergences along with the 3/10 Momentum Oscillator.

In each even from July 2013 to January 2014, price retraced in a sell-swing down against the new “retest” high.

Friday saw an incremental new “all time” high for the S&P 500 ahead of an intraday reversal that carried forth with additional selling today (Monday, March 24).

After each yellow highlighted “Failure Test” pattern, I also included the red highlighted “sell swing” or retracement against the uptrend.

With the exception of January 2014, price completed a shallow but stable retracement down toward – or just under – the rising 50 day EMA.

For now, we’ll continue to focus our attention on the 1,875/1,880 pivot high and potential for yet another possible repeat outcome from the “Weak New High” or Failure Test pattern that developed three times recently on the Daily Chart.

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