Is this very broad stock index suggesting that a top is in play? What the NYSE Composite does to close this week should go a long way to answering that question.
This chart looks at the NYSE Index on a weekly basis during the past 4 years. Over the past 15 months, it has created a series of lower highs and lower lows inside of the shaded falling channel. It hit strong support around Christmas at (1) when a counter-trend rally started. The rally now has it testing the top of the falling channel at (2).
The NYSE could be creating a bearish reversal pattern (bearish wick) at the top of the falling channel at (2). If the NYSE turns weak at this key resistance point, it would indicate that an important top in the market is in play.