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From a charting perspective, the market has become vastly more interesting in just the past few trading days. As I mentioned last week, we finally had a failure of the March 2020 trendline. I think that, in the weeks ahead, the small caps is going to remain the most interesting sector to short.
Beneath the surface of major equity indexes hitting lifetime highs day after day, there is rot. You don’t have to look very hard for it, either. I have gathered up some charts below to illustrate how some very well-known names have breached important levels of support, and having pretty much nothing but air holding them up above $0. I am just showing three to everyone, but the other ten for all paying members. Look out below!
This is a good real-life example of how charting can be very helpful in giving warnings that something is going wrong.
Below is the chart of DraftKings (DKNG) without the past couple of months. This stock was one of the very few SPAC offerings which was actually thriving. It had a nice saucer pattern, followed by a right triangle. The breakouts were clean, and the stock was making steady highs.
On the bigger picture here the overall position on SPX is bullish. There has been a solid break over the big resistance level at 4000, and SPX is currently on both monthly and weekly upper band rides. There is currently no negative divergence on either of the monthly or weekly charts, with the weekly RSI 5 sell signal that had fixed having failed.
SPX monthly chart:
