S&P 500 Slammed Into Parallel Channel Resistance, Promptly Drops

The S&P 500 rallied 33% from the April 7th, 2025 lows to the all-time high on July 31st, 2025. The all-time high on July 31st was triggered by Meta Platforms (META) and Microsoft (MSFT) blowout earnings. However, the pop was short lived. Markets reversed that day, closing sharply lower and continued their collapse on August 1st.

So why did great earnings from multi-trillion-Dollar market cap companies cause a market sell? It is all in the charts.

On the gap higher that made the all-time high, the S&P 500 slammed into a parallel trendline that starts by connecting the major pivot lows from 2023 to April 7th, 2025. A perfect parallel to this line marks a high pivot from 2024 and the high seen on July 31st. This can be seen in the chart above.

Remember, the chart represents human psychology. Essentially, greed hit an extreme among retail investors and institutions started dumping heavily. This came just before the Non Farm Payrolls Report that was a major disappointment. Whether institutions knew the numbers ahead of time is up for debate...

Either way, the chart signaled a top and a top has now been made (at least in the near-term). Look for further downside in the coming weeks/months.