S&P Prints Large Bearish Engulfing Candle

Biggest Drop in Three Months: S&P 500 and Nasdaq Tumbles Amid Late Sell-Off

The S&P 500 and Nasdaq experienced significant declines yesterday, the largest in three months, as a late sell-off halted Wall Street's push for a record high.

The drop was driven by Big Tech stocks, which hold substantial sway over market direction. About 96% of S&P 500 companies ended lower, leading to a 1.5% decrease in both the S&P 500 and Nasdaq at the closing bell, marking their largest fall since September 21.

S&P 500 Daily Candle Chart
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Bearish Engulfing Pattern

If we zoom into the S&P 500’s daily candle chart, we can see that yesterday’s price action formed a large bearish engulfing candle.

Yesterday’s range completely engulfs the prior four sessions – adding significance to the pattern.

Pattern’s of this nature tend to signal trend exhaustion and we could now see the S&P 500 enter a prolonged pullback after a stellar run higher during the last two months.

S&P 500 Daily Candle Chart (zoomed)
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Past performance is not a reliable indicator of future results

Accelerated Selling into Closing Bell

Dropping down a couple of timeframes to the hourly candle chart reveals that the majority of yesterday’s bearish engulfing pattern formed during the last three hours of trading.

This accelerated selling into the closing bell was backed by rising volume – signalling intensified market activity and potentially indicating a strong conviction among traders towards the downside. The surge in volume accompanying the sell-off suggests increased participation, implying a shift in sentiment.

S&P 500 Hourly Candle Chart
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Past performance is not a reliable indicator of future results




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