Some concerning candle patterns for leading technology names have caused me to focus on potential downside targets for the S & P 500 . Because if the mega cap growth stocks start to falter, it could be a dangerous summer for our growth-dominated benchmarks. This week, we observed bearish candle patterns for key technology names, with Nvidia Corp (NVDA) and other semiconductors featuring the dreaded bearish engulfing pattern. After an extended bullish run for these stocks, this may indicate at least a meaningful pause in the relentless uptrend. Here we see confirmed bearish engulfing patterns for the VanEck Vectors Semiconductor ETF (SMH) , Nvidia, and Micron Technology (MU) . This two-day pattern indicates a potential short-term reversal, with a long up day followed immediately by a long down day. Why is this pattern so powerful? Because on day two, after opening higher, traders are selling strength to rotate the stock to a short-term distribution phase. And by closing below the open of day one, the price confirms a likely bearish rotation in sentiment. To be clear, this is a short-term pattern, and is really just intended to inform our thinking for the next couple trading sessions. But I’ve often found that significant candle patterns happen at market extremes, as the short-term reversal leads to further deterioration as investors get scared away from a potentially broader and more painful downturn. Given the bearish short-term signals from some key leadership names, as well as the overbought conditions for our major benchmarks, I revisited some downside targets for the S & P 500. To put it simply, what would we need to see in terms of price action to confirm a summer market top? In terms of short-term reversal signals, the recent price gap around S & P 5,400 is the first “line in the sand” in my opinion. As long as the S & P remains above this level, and also holds a trendline created by lining up the major lows since October 2023, then this market is still in a very bullish configuration. But what if the bearish candle patterns we’ve observed are just the beginning, and we see further weakness into next week and beyond? The most important level to watch is S & P 5,200, which would represent about a 5% pullback from the recent market peak. Five percent pullbacks are actually quite common, even in raging bull years in market history. If the S & P 500 were to break below 5200, that would mean not only has it failed to hold the recent price gap, but it also has dropped below the 50-day moving average as well as the most recent major low from the end of May. If 5,200 would fail to hold, then I would consider the “point of no return” to be S & P 4,950. That level is based on the April 2024 price low, as well as the 200-day moving average. If we would see enough of a downward pull that the 200-day would fail to hold, there would be a strong likelihood of a deeper and more protracted correction, and investors would need to strongly consider more defensive positioning. One way I like to visualize this sort of framework is using a “stoplight” technique, based on these key “lines in the sand” for the S & P 500 index. How would I interpret price action around these levels? If we remain above 5200, then this market is still very much in a position of strength, despite any sort of short-term price distribution. A move below S & P 5200 would cause me to revisit long positions and start to raise cash due to an elevated risk of a correction. If and when the S & P pushes below 4950, I would be positioned way more defensively, waiting for some signs of accumulation to emerge. During a bullish market phase, it can be very comfortable to just close our eyes and hope for further upside. But savvy investors know that by clearly defining levels of risk, they can be best prepared for whatever lies ahead. -David Keller, CMT marketmisbehavior.com DISCLOSURES: (None) All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.