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 selling continued this week, with the S&P 500 approaching its rising 40-week moving average and the Nasdaq 100 extending its decline well below that level.
We’ve been discussing deteriorating leadership, defensive rotation, and challenging conditions for swing traders for several weeks. This week’s action reinforces those observations, with additional weakness in technology, semiconductors, and other former market leaders.
The equal-weight S&P 500 also reversed sharply from recent highs, while market breadth began to roll over. Relative-strength relationships continue favoring value over growth, consumer staples over discretionary, and low volatility over high beta.
But sharp market declines eventually create opportunities.
The question isn’t whether we can predict the bottom. It’s whether we can recognize improving price structure and find attractive setups with clearly defined risk.
In this week’s Weekly Charts, we examine the major indices, important technical levels, and the shorter-term roadmap to identify what needs to change before taking on more long exposure.
We don’t need to be first. We just need to be ready.
Key Takeaway
Major indices remain under pressure. SPY is approaching its rising 40-week moving average, while QQQ has broken well below that longer-term reference point.
Weakness is spreading. RSP reversed sharply from all-time highs, and breadth measures began to roll over after several weeks of improvement.
Defensive rotation continues. Value, consumer staples, and low-volatility stocks maintain relative strength as growth and technology struggle.
Important levels aren’t automatic buy signals. Moving averages and anchored VWAPs provide reference points, but price must demonstrate that buyers are regaining control.
The roadmap remains unfavorable for longs. Lower highs and lower lows beneath declining 5-day moving averages suggest continued caution.
A bounce isn’t necessarily a bottom. Countertrend rallies may offer short-term opportunities without indicating a sustainable recovery.
Look for improving structure. Higher lows, rising 5-day moving averages, reclaimed AVWAPs, and favorable risk/reward will help identify better opportunities.
Patience remains the priority. There is no need to anticipate the bottom or force trades before attractive setups develop.
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.
