Equity Charts Setting Up Bearishly

That being said, the equity index charts have been setting up bearishly for weeks, if not months, now and nothing too bearish has happened and so let’s just look straight to those charts and levels starting out with the Dow Jones Industrial Average.

As can be seen, its recent Bear Pennant was confirmed at one point earlier when the Dow was below 13166 with it seeming likely that this pattern will reconfirm for its target of 12735 soon.Perhaps putting off that potential reconfirmation, though, is the upside gap that may close briefly at about 13240 or so and this brings us broad levels to watch here that are at 13124 and 13288.Above the latter and maybe that bearish set-up goes away or is pushed into the future but below the former level and it may manifest soon.

Keeping this short, let’s look at the index that was trying to evade its Bear Pennant yesterday but is showing a spectacular and on-again off-again – currently on – Spike Top today and that is the Russell 2000.

The Bear Pennant marked in above is bigger than the one shown yesterday and for this reason you can really make the case that it confirmed below 828 just as its Spike Top did and this puts the focus on the pattern’s target at 785.

Similar to the Dow, maybe the Russell 2000 climbs back up to close that gap at about 837, but it would appear to be a tough haul and this puts the focus on levels at 818 and 843.Above the latter and the Russell 2000 will trade higher into the top of its long-term sideways trend but below the former and this small cap index may make another dive at its 50 DMA.

Overall, then, despite the possibility of some upside gap reprieve, equity charts are setting up bearishly with this dynamic showing around the other indices along with some of the sector ETFS.