The Deadly Flatline
Will Bulls Need a Doctor Soon?
SPY continues to grind sideways, closing Thursday at essentially the same level it was 118 days ago in mid-October 2025, right around when many markets topped out and began this extended consolidation. During that stretch, SPY has dropped no more than 5.5% peak to trough, with most of the action confined to a tight 3–4% range. It has managed to hold the 100-day SMA so far, even as bearish RSI divergence continues to build.
If you’ve followed my newsletters for any length of time, you know I enjoy taking trips down memory lane. So let’s revisit similar consolidations that formed after strong bull runs, specifically those that developed at the highs, not after corrections, since the character of those setups is markedly different.
The most recent parallel is the chop into late 2024 and early 2025. That consolidation lasted roughly 105 days, depending on how you measure it. What followed was a swift 21% decline in fewer than 47 trading days. The setup featured persistent bearish RSI divergence, and the major warning sign came when price broke the 100-day SMA and failed to reclaim it in the sessions that followed.
SPY Present day and 2025 Consolidation
Before that, we have to rewind to 2015. After an extremely powerful bull run, the market stalled and chopped sideways for an astounding 175 days in a tight 3% to 4% range. Then came a sharp, nearly 14% plunge in just over a month.
Bearish RSI divergences appeared throughout that consolidation, much like we are seeing now. The first major crack came when SPY lost its 100-day SMA decisively and broke down from a wedge pattern on June 29, 2015. No new highs followed. It did, however, stage a sharp bounce just enough to pull the bulls back in before the bottom fell out.
SPY 2015 Consolidation
Further back, 2011 offers another strong comparison. After a powerful run, the market consolidated for roughly 158 days within an 8% range. That period was followed by a nearly 19% decline. Price recovered somewhat but ultimately carved out a lower low double bottom, roughly 22% below the prior high, before finally stabilizing.
That consolidation also featured clear bearish RSI divergence. The first major warning sign came when price broke the 100-day SMA. No new all-time highs followed that break. Similar to 2015, the market delivered a sharp B wave bounce that drew the bulls back in, only to follow with a crushing C wave move lower.
2011 Consolidation
These three chart patterns feel the most analogous to today. To avoid any accusations of cherry-picking, let’s add three more from the dot-com era that did resolve higher, including the blue dot-com analog I have tracked for months, which is now teetering on a broken correlation.
The reason I do not find those quite as relevant is that each of those so-called consolidations saw at least a 13% peak-to-trough decline. A 13% pullback in SPY from here would align with the type of reset I expect to see if key supports break. If anything, these actually support the thesis outlined above: these patterns historically tend to resolve with a 10%+ correction.
SPY Dot Com Bull Market
As for the dot-com analog, it is still technically intact, but it would require a sharp throw-over move above the upper trendline before reversing in order to remain viable. Even in that scenario, the next bullish pop would not be something to chase. It would more likely present an opportunity to sell into strength ahead of the actual correction, which in that case would simply be delayed by a month or two.
SPY Dot Com Analog
I know my posts since October have leaned more bearish than bullish, but trust me, I am not a permabear. I get defensive when charts flash major warnings, like calling Bitcoin’s top after it broke the 120-SMA on the 3-day chart in November near the $100,000 level, well before the 50% drop that finally turned most traders bearish. My aim is always to analyze price action objectively and piece together the most cohesive market thesis I can.
We have already watched the QQQ lose its 100-day SMA and then run into resistance when trying to reclaim it. So far, SPY has managed to hold its 100-day SMA. One of the main reasons I continue to stress how important that level is comes directly from the case studies outlined above. When SPY breaks its 100-day SMA in the presence of the other warning signals we are seeing, it has not historically resolved in a bullish way. Hopefully this post helps clarify why that level matters so much and why I remain cautious under current conditions, whether that ultimately proves right or wrong.
Bottom line: I am not permanently bearish. Any meaningful correction becomes an opportunity to position for new highs or even lower highs with significant upside, and I will hedge aggressively if the move evolves into something deeper and more sustained. This chop has been tedious, but the historical analogs above suggest it could continue for another couple of months. At that point, I may be writing short stories in these updates because there will be little new to report as price grinds sideways. History shows that similar chopsolidation at highs has often resolved with sharp downside moves. Monitor your key levels, respect your stops, and stay disciplined.