Chart of the Day – Wednesday, April 17, 2024

Textbook false breakout in Midcaps ETF $MDY

Seeing a lot of these… pic.twitter.com/nJTrfunA12

— Justin Spittler (@JSpitTrades) April 17, 2024

Today’s Chart of the Day was shared by Justin Spittler (@JSpitTrades).

• The S&P 500 is only down -4.4% from record highs. However, the market looks increasingly weaker as you go down the cap scale.

• The Mid-Cap ETF ($MDY) is down -7.0% from record highs, while Small-Caps ($IWM) are in a media-defined bear market, down -20.4%. It’s worth noting that $MDY lost one of its star players last month as $SMCI graduated to the S&P 500.

• Mid-Caps broke out to record highs in March, but Justin points out that $MDY is firmly below its 2021 peak, confirming a failed breakout. Failed breakouts can get ugly quickly. As they say, “From failed moves come fast moves in opposite directions.”

The takeaway: The S&P 500 remains comfortably above its prior cycle highs. However, Mid-Caps are dealing with a failed breakout, and Small-Caps are so weak that they never had a breakout to ruin in the first place.