The SPY Rising Wedge Formation Revisited...

Typically, Rising Wedge formations END with a thrust out of the top of the Wedge, but fail to follow through on the upside, and instead reverse sharply to the downside, leaving behind a major Bull Trap Reversal that inaugurates a meaningful percentage correction of the most recent upleg, in this case from the 11/21/25 pivot low at 650.85 to the forthcoming new ATH, let's say at 700 to 703 (See my attached Daily Chart).

The above-mentioned "traditional Rising Wedge" upside exhaustion scenario did not unfold last Thursday evening after Amazon's disappointing Earnings report.

Last Thursday, before Amazon Earnings, I posited here that all of the price action from the 10/29/25 high in SPY carved out a Rising Wedge formation that represented the concluding (exhaustion) pattern atop an intermediate-term bull run (from the October 2022 low, but specifically, from the April 2025 low). Furthermore, a sustained breach of the prior pivot low coordinate within the pattern (1/20/25 at 676.57) would confirm a breakdown from the Rising Wedge into a significant correction. 

What happened next was not traditional and not typical for the price path of a Rising Wedge Formation: Instead of spiking UP to a marginal new ATH, the negative reaction to AMZN's Earnings precipitated and extended the downward price spiral. 

Amid a margin call, collateral death spiral in Crypto, in software stocks, in some members of the Mag7, such as Amazon, SPY crashed below 676.57-- the prior low coordinate at 676.57 from 1/20/26 within the Rising Wedge, spiraling down to 670.92 in what looked like the initiation of the fallout from a non-traditional correction from the Rising Wedge scenario.

Just a few hours later, however, around 8 PM ET, the markets bottomed (E-mini S&P futures contracts), and pivoted to the upside into the start of a vicious, vertical rally in ES and SPY that remains intact as we speak, and appears to be en route to another new ATH above 697.84 (1/28/26) to a projected target zone of 700 to 703.

Should such a price path unfold, at new ATHs in general, but in particular, in the 700-703 target zone, I will be acutely aware of the potential for a Bull Trap, Upside Exhaustion, Downside Reversal from a traditional post-10/29/25 Rising Wedge Formation... Last in SPY in pre-market trading is 694.55... 

Forewarned is forearmed, as they say... MJP