Happy Friday.
Today, we’re hosting a live webinar with Q&A for Professional-tier and institutional CappThesis members. I have over 100 slides 📊 teed up.
One of the topics we’ll be discussing is the pattern work. This should come as no surprise, as chart pattern analysis is the crux of our process. It literally determines how we construct a market stance.
Early on Wednesday morning, the S&P 500 hit a big pattern target of 6,555 🎯.
👇 Here’s why it matters.
(This first appeared in our pre-market Opening Look note Thursday morning.)
6,555 Target Hit
Almost immediately on Wednesday morning, the S&P 500 hit the 6,555 level, which has been our upside target from the inverse bullish head-and-shoulders pattern breakout triggered on May 12.
Notably, the gap that initiated said breakout was never filled, meaning the breakout zone was never truly retested. That’s clearly bullish. We highlighted this at the time, marking the risk zones during the first few weeks of the move.
Hitting this objective is a significant achievement, especially given how lofty the level appeared when we first published it. At the time, we received some pushback, and understandably so — the target was not only well above the most recent highs but also seemed like a stretch from where the market was trading then…
The skepticism at the time was understandable. By then, the S&P had already advanced 18% in just four weeks from the April low — a huge move in a short span — making it hard to envision a price target more than 15% above the then-current levels (near 5,700).
Adding to the doubts, the 5,850-zone looked like formidable supply. The index had failed there in March, breaking down through that same area earlier in the month, and it had also stalled there in January 2025, as well as November and December of the prior year (red highlighted area below).
These repeated failures made it reasonable to expect the pattern to not work. On top of that, the S&P soon hit overbought territory for the first time since the comeback began.
Even if it managed to clear 5,850, the 6,100-area (red arrows) was widely viewed as impregnable.
As we now know, all of those zones were overtaken, and the target now has been achieved…
Third Upside Target Hit
This also marks the third major upside target the S&P has achieved since the lows. The first came from the inverse head-and-shoulders pattern that was most visible on the 60-minute chart.
Once the index broke out, it rallied to 5,840 by May 12 — the same date at which the just discussed latest pattern breakout was triggered.
Along the way, the first bullish pattern on the daily chart became clear when the S&P broke above 5,500. That breakout was tested immediately and held each time, ultimately producing a target of 6,125, which was achieved in late May.
Two More Bullish Patterns
Even though the S&P 500 finished off the highs on Wednesday, the most recent bullish pattern (albeit much smaller) we’ve been tracking also was triggered. The key now is whether the index can hold above this area. If it does, the 6,665 -target will remain in play.
It’s worth noting that two smaller bullish setups have already failed over the past few weeks. For this rally to extend meaningfully, we will eventually need to see smaller formations start to succeed again.
If the smaller bullish setups begin to work once more, then our highest target (so far) of 6,745 can also be attained. This one was triggered on May 12, too, showing once again how the biggest chart formations are born from intense preceding volatility.
Live Patterns
Thus, that gives us two live bullish patterns…
… and NO bearish patterns.
The last potential bearish setup was this one.
Regardless of the market environment, we track bearish patterns just as closely as bullish versions.
Why?
In uptrends, bullish patterns work and bearish patterns fail.
When that changes, the trend will change.
But not before.
No bearish patterns...that we can recognize. Hmn...