The term "head and shoulders top" is often thrown around when a stock starts to show signs of distribution. As the work-from-home stocks have struggled recently, charts like Peloton Interactive (PTON) have transitioned from accumulation to distribution phase causing investors to question their long-term prospects.

Relative strength is one of the most important parts of my technical toolkit. Basically, the idea is to lean into stocks that are working and lean away from stocks that are not working.

Here we’ll review how a bearish momentum divergence signals a potential trend exhaustion, and how to validate and confirm these signals using traditional support and resistance levels.

Gold has had a rough six months, with the gold ETF (GLD) dropping 20% since peaking in August 2020. While many consider gold to be an inflation hedge, concerns about increased inflation have not manifested themselves in higher gold prices.

The S&P 500 wrapped a rather volatile week by settling in at the upper end of the 3200-3600 range. One key breadth indicator shows clear similarities to the bull run in early October, and also provides a prescription for bulls looking for validation of further upside.

While reviewing the 11 S&P 500 sectors and identifying stronger charts in the pile, it’s hard to find a better setup than the Utilities sector. The XLU chart also provides a textbook example of big base breaking on improving relative strength.

Ratio analysis is a critical piece in my macro technical approach, as it helps to differentiate different sectors, styles, regions, and themes by gauging their relative performance to one another.

This past Monday, I asked three experts on the Presidential Cycle - Bruce Fraser, Jeff Hirsch, and Tom McClellan - to share their take on market trends around the election season. They delivered in a big way, and the result was a masterclass in how to learn from market history.

As I paged through the S&P 500 charts during my normal weekend review, I started to identify some consistent patterns in the leadership sectors of Consumer Discretionary and Technology. Today I’ll share with you how I bucket these charts by their patterns, and why the Consumer Discretionary Sector SPDR (XLY) is likely the most important chart to watch.

“This is a narrowly-led mega cap bull market.”

I can’t tell you how many times I heard myself saying those words at some point over the last couple years. I’ve repeated it so many times that I just assumed it has continued.