Big Levels Are Breaking

Every week, I go through thousands of charts looking for evidence to define the market environment we’re in.

Right now, the message is clear: important groups are losing key levels, and leadership is starting to crack.

I’ve been highlighting these red flags since February — and now a growing list of them are breaking.

Let’s walk through the charts that are keeping us on the right side of this tape.

First up, the Nasdaq 100 $QQQ.

This is the offensive leadership group, and it’s now violating a critical level near 580 — the neckline of a multi-month distribution pattern that also lines up with the VWAP from last year’s lows.

When leadership breaks, it matters. The completion of this topping pattern points to broader weakness across the major indices.

Next, we look at speculative growth through the ARK Innovation ETF $ARKK.

ARKK is completing a year-long distribution pattern, breaking below a key level around 69.

The bulls had multiple opportunities to reclaim that level and failed. Now, with prices below the AVWAP from last year’s lows, the path of least resistance is lower.

And then there are Small Caps $IWM — one of the most sensitive gauges of risk appetite.

These are the riskiest stocks in America, and they’re now threatening to fall back below their prior cycle highs from 2021.

If that level gives way, it puts them back in the penalty box and confirms that risk appetite is fading.

Until bulls step back in and momentum returns, we’re in a “keep money” mode. 

Patience isn’t just a mindset—it’s a position. The market needs to prove itself again, and right now, it hasn’t done that yet.

Let me know what you think about this note—shoot me an email, I’d love to hear your thoughts!

Stay sharp,

Alfonso De Pablos, CMT

Director of Research, All Star Charts

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