Taking the analysis further
If you want to go deeper than the weekly charts — including how the levels translate into actual trade planning and risk management — you can follow the work Brian Shannon and I do at Alphatrends.
That’s where we walk through the same market structure in real time and apply the process to current trade setups.
Summary
The major indices remain under pressure, but beneath the surface, the market is telling a more nuanced story.
The S&P 500 and Nasdaq 100 continued weakening this week, while the Dow and Russell 2000 showed greater relative resilience. Technology and many of the market’s largest growth stocks remain under pressure, yet the equal-weight S&P 500 advanced for a fourth consecutive week.
Market breadth continues improving. The percentage of S&P 500 stocks above their 50-day and 200-day moving averages has increased, and the S&P 500 Bullish Percent Index has recovered toward 50% after recently approaching traditional washout levels.
But where that strength is developing matters.
Healthcare, energy, consumer staples, and other relatively defensive areas have led recent performance. Relative-strength relationships favor value over growth, staples over discretionary, and low volatility over high beta. Meanwhile, Treasuries have rallied for three consecutive weeks while high-yield bonds remain technically weak.
These developments suggest that capital is rotating rather than simply exiting equities. Participation is broadening, but risk appetite remains subdued.
For swing traders, the distinction is important. Despite improving breadth, we’re not seeing a corresponding expansion in high-quality individual stock setups.
In this week’s Weekly Charts, we examine the changes in market leadership, the evidence of defensive rotation, and what our index futures roadmap tells us about the immediate trading environment.
The top-down analysis tells us where to look. The bottom-up analysis tells us what to buy, when to buy it, and where we’re wrong.
As always, the goal isn’t to predict the next move. It’s to understand the evidence, identify opportunities, and manage risk.
Key takeaways
Major indices remain under pressure. SPY and QQQ declined again, with continued weakness beneath important moving averages and anchored VWAP levels.
Breadth continues improving. RSP advanced for a fourth consecutive week, participation above key moving averages increased, and the S&P 500 Bullish Percent Index recovered toward 50%.
Leadership is rotating. Healthcare, energy, consumer staples, and other relatively defensive groups have outperformed technology and communications over the past two weeks.
Relative-strength relationships confirm the defensive tilt. Value is outperforming growth, staples are outperforming discretionary, and low volatility is outperforming high beta.
Credit markets remain cautionary. Treasuries have rallied for three consecutive weeks, while high-yield bonds remain in a bearish consolidation beneath a declining 4-week moving average.
The largest companies are losing momentum. MAGS and XLG show continued weakness, even as the equal-weight S&P 500 holds up considerably better.
Better breadth doesn’t necessarily mean better trading conditions. The improving participation has not produced a meaningful expansion in attractive swing-trading setups.
The roadmap argues for continued selectivity. S&P and Nasdaq futures remain in short-term downtrends, while Russell and Dow futures exhibit relatively stronger, but mixed, structure.
References & Chart Resources
Chart School
https://www.trading-adventures.com/t/chart-school
The Bullish Percent Index – A Technician’s Perspective
Relative Strength – What Is It Really?
Take the analysis further
If you want to go beyond the weekly charts — including how the levels translate into real trade planning and risk management — you can follow the work Brian Shannon and I do at Alphatrends.
That’s where we review the markets in real time and walk through how the same principles are applied to current trade setups.
Important: This content is provided for educational purposes only. If you’re reading this online, please review the full disclosure here.
