I have composed these before Friday’s open, but it’s worth checking out the state of the big indexes. They fall into two general camps. The first one is represented by the four charts below, and they share these characteristics:
- Large distribution top hammered out over a period of months, during which time lifetime highs were achieved;
- Medium-term resistance represented by the dashed red line;
- Major support defined as the bottom of the tinted zone.
Simply stated, a failure of the tinted area means it’s party time for the bears.
The other class of chart doesn’t require a list of characteristics, since it really has just one feature: the failure of a major ascending price channel. For whatever reason, semiconductors have closely followed the path of the small caps, and they have bothered cut underneath a channel which has been intact ever since so-called Liberation Day.
In my estimation, the bears are better positioned right now than they have been in years.
