Hey Prop Traders, here’s are some valuable tips, terms explained and prop firm news for July 10, 2025

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Is THIS the Sign of a Top in S&P?

Is the stock market overstretched—primed for a pullback? The S&P 500 has now closed above its upper Bollinger band for eight consecutive trading days. When a major index spends that long outside its volatility envelope, it often signals an overextended move—and history suggests this setup can lead to meaningful consolidation or even a correction.

Historical Precedent: Eight Days Above the Upper Band

• June 2024 Streak: The S&P 500 traded above its upper Bollinger band for eight straight sessions. Initially, it sparked only two weeks of sideways drift, but by July 2024 the index was off roughly 10% from its highs.

• April 2024 Reverse Signal: Conversely, when the index closed below its lower Bollinger band for eight days in April 2024, it marked an oversold condition. What followed was a 6% near-term rally—and the catalyst for a much longer uptrend.

These examples underscore the power of extended band breaks to foreshadow either a pivot or a pause. If history rhymes, this week’s eight-day streak could be warning us of an impending pullback—or, less commonly, simply a brief “shakeout” before new highs.

What Bollinger Bands Measure

Bollinger bands consist of a 20-period simple moving average (SMA) flanked by upper and lower envelopes at two standard deviations. When price consistently closes above the upper band:

1. Volatility Expansion: Standard deviation is rising, meaning swings are growing wider.

2. Overextended Buying: Persistent closes outside the band suggest buyers have pushed too aggressively.

3. Mean Reversion Risk: Markets have a tendency to revert toward the 20-period SMA—either via sideways consolidation or a sharper retracement.

In plain terms, an eight-day stretch above the upper band tells us the rally with little fundamental underpinning may have become overcooked.

Macro Drivers on the Horizon

Technical signals alone aren’t destiny. A handful of fundamental catalysts could trigger or exacerbate a pullback:

• Tariffs: Renewed trade tensions could dent corporate margins, undermining growth expectations.

• Inflation Data: Next week’s CPI and PPI releases will reveal whether price pressures are truly decelerating—or entrenched in sticky categories that force the Fed to remain hawkish.

• Retail Sales: If consumer spending shows cracks, high-valuation sectors could come under renewed scrutiny, leading to sector-specific weakness or a broader unwind.

Taken together, these macro factors—layered atop an extended technical move—raise the probability of at least a short-term correction.

Do You Agree?

So here’s the question: do you believe the market is overstretched today and ripe for a pullback? Or do you think the bulls will steamroll through these upper-band levels and power on toward new highs? Trade your view with confidence utilizing Axi Select’s free prop trading program.

Managing Risk: Trade Your View with Axi Select

Of course, no one nails the absolute top or bottom. If you wait for the perfect reversal pattern, you risk missing the move entirely - or worse, breaching your prop-firm consistency rules by chasing after early signals.

With Axi Select’s funded trader program, you can:

• Express Your Conviction: Go long or short based on your view of overextension.

• Size and Scale: Define your risk parameters up front—no surprises, no rule violations.

• Stick to Your Plan: Execute your strategy without the fear of “account shutdown” for breaching consistency rules.

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