Howestreet.com - the source for market opinions

ALWAYS CONSULT YOUR INVESTMENT PROFESSIONAL BEFORE MAKING ANY INVESTMENT DECISION

August 1, 2025 | Warning Sign? S&P and Nasdaq Flash Outside Reversal Patterns

Martin Straith

Trend News Inc. was founded in 2002 by Martin Straith. Martin had been a successful investor in the markets for over 20 years & after the DOT COM stock market crash, he felt that there needed to be an investment newsletter that helped educate investors on how to protect their wealth, & become better, more successful investors.

Here are a few key charts that capture today’s market story.

We start with the S&P 500 heatmap for Thursday. Outside of a handful of Big Tech names – most notably META and Microsoft, which delivered standout earnings -the broader index was awash in red.

Despite strong results from those leaders, both the Nasdaq and S&P 500 posted what’s known as outside reversal days.

Here’s what that means specifically:

Outside day’:
The day’s high is higher and low is lower than the previous day’s range – so it completely ‘engulfs’ the prior day’s trading range.

‘Reversal lower’:
The index closes below the previous day’s close, despite opening strong (and possibly making new highs intraday).

Nasdaq – Outside Reversal

S&P 500 – Outside Reversal

What it suggests:

  • Early strength was overwhelmed by selling pressure, showing a loss of momentum.
  • Outside reversals to the downside often act as short-term warning signals—especially during extended rallies.
  • When combined with heavy volume, it can add conviction to the bearish setup.

This doesn’t guarantee a major top, but it raises a caution flag that a pullback or period of consolidation may be near.

Stay informed!

Martin

STAY INFORMED! Receive our Weekly Recap of thought provoking articles, podcasts, and radio delivered to your inbox for FREE! Sign up here for the HoweStreet.com Weekly Recap.

August 1st, 2025

Posted In: The Trend Letter

Post a Comment:

Your email address will not be published. Required fields are marked *

All Comments are moderated before appearing on the site

*
*

This site uses Akismet to reduce spam. Learn how your comment data is processed.