Technical analysts mark up their charts so that simple facts stand out clearly.
The chart above is RSP, the Invesco Equal-Weight S&P 500 ETF. You likely know by now that the S&P 500 is "cap-weighted" such that the largest stocks in that universe have an outsized influence on how that index performs. RSP, on the other hand, gives every stock the same weight. As a result, RSP gives a better view into how the average stock is performing.
If you take a look at the chart, you’ll see a few blue-gray rectangles that I’ve added to the chart. I add these rectangles to represent key support and resistance areas. Note that Monday’s action (the last candle on the screen) fell through one of these support zones. While it was not a dramatic failure, it was a failure none-the-less.
Furthermore, note that this zone dates back to the high from November 11th of 2024. Therefore, over the last 12 months, the average stock in the S&P 500 now has a negative trailing twelve-month return. That is quite counter to what you here from the typical talking head in this industry.
One more point before moving on. Take a look at the bottom pane. That’s the 14-period RSI and it is showing us that RSP is not over-sold.
Put these two facts together ... and don’t be surprised if we see further weakness.
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