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 market experienced a significant change in character this week, with aggressive selling in technology, growth stocks, and several of the groups that have led the advance.
The Nasdaq 100 declined 5.5% across five consecutive losing sessions, breaking below important moving averages, trendline support, and anchored VWAP levels. The S&P 500 produced a bearish engulfing weekly candle, while small-cap stocks also experienced accelerated selling.
But the weakness wasn’t universal.
The equal-weight S&P 500 actually advanced, and the percentage of stocks trading above their 50-day and 200-day moving averages improved for the second consecutive week.
So what’s happening beneath the surface?
Leadership is rotating away from technology and growth toward value, energy, consumer staples, and lower-volatility stocks. While participation has improved in certain respects, the increasingly defensive nature of that rotation suggests deteriorating risk appetite.
Meanwhile, continued weakness in high-yield bonds and a pickup in volatility add to the reasons for caution.
After such sharp selling, a short-term relief rally wouldn’t be surprising. But a tradable bounce and a sustainable recovery are two very different things.
In this week’s Weekly Charts, we examine the technical damage, changing leadership, and the conditions that could help determine whether an eventual bounce develops into something more meaningful.
The focus remains on price, trend, structure, and risk—not predicting what happens next.
Key Takeaways
Technical deterioration: The S&P 500 closed below its 4- and 10-week moving averages, while the Nasdaq 100 broke important trendline and anchored VWAP support following a 5.5% weekly decline.
Improving breadth, weakening indices: The equal-weight S&P 500 advanced, and the percentage of stocks above their 50-day and 200-day moving averages improved for a second consecutive week.
Leadership is rotating: Technology, semiconductors, software, and growth stocks experienced significant selling, while energy, value, and consumer staples demonstrated relative strength.
The rotation is increasingly defensive: Consumer staples outperformed discretionary stocks, value outperformed growth, and low-volatility stocks outperformed high-beta stocks. These relationships suggest declining risk appetite.
Credit markets remain a concern: High-yield bonds continue to exhibit bearish price structure, while investment-grade bonds and Treasuries experienced a relief rally.
A bounce may be developing: Following the sharp decline, a short-term rally is possible. The important questions are where resistance emerges, whether buyers can reclaim key levels, and whether the market can begin rebuilding constructive structure.
Respect the timeframe: Short-term countertrend rallies can offer trading opportunities without signaling that the larger correction has ended.
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.
