299 was the breakdown level for the Magnificent Seven. But the market just reclaimed it.
Here’s the chart:
Let's break down what the chart shows:
The chart shows the Equal Weight Magnificent Seven Index as a blue line.
The Takeaway: The Equal Weight Magnificent Seven had started to look like it was forming a top. Price stopped making progress higher and the rally began rolling over. The advance lost momentum and the pattern started leaning lower.
Then price broke below 299, the level that had been holding the trend together. That break looked like confirmation that the topping pattern was complete and the leaders were finally cracking.
But the breakdown never developed.
Selling pressure faded quickly and price turned back up, pushing right back above the level that triggered the move lower. The market tried to break the trend and could not build momentum in the new direction.
The bears were expecting downside follow-through, but price stalled below the level and moved back above it. That shifts the pressure back the other way in favor of the bulls.
The bears needed follow-through below 299.
They didn’t get it.
Now the bulls have a level to defend.
The break below 299 was supposed to confirm the top.
Grant Hawkridge | Chief Aussie Operator, All Star Charts
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