Notes from Chart Guys video: Sellers Weak! - Weekly Market Wrap

Summary of Dan’s (The Charting Man) and Lamont’s weekly market evaluation. All credit goes to The Chart Guys for the original analysis and insights.

The Setup: Sell The News

FOMC announced the expected 25 basis point rate cut Wednesday. Market sold the news - exactly as expected.

But here’s what matters: Sellers couldn’t create meaningful damage.

Week closed as a doji candle. Traders are asking: “Is this a reversal?”

Let me show you why the answer is no.

Context is King: Doji Alone Means Nothing

A doji candle pattern needs context. Here’s why this one isn’t bearish:

1. Location matters:

  • We’re in blue skies without overhead resistance
  • Doji at resistance = potential reversal
  • Doji in blue skies without resistance = not problematic

2. Affirmation required:

  • Doji needs to be “affirmed” not “confirmed” (nothing is 100% confirmed)
  • Need break under prior week’s low to affirm as reversal
  • We haven’t seen this

3. Fear & Greed Index:

  • Still in fear zone
  • Major tops are made at greed/extreme greed, NOT fear
  • Local tops in bear markets can be at fear
  • Bull market tops = greed

Bottom line: Context says this doji is not a bearish reversal signal yet.

The Smoking Gun: Weak Selling

Let me show you how weak sellers actually are:

NASDAQ (NQ/QQQ) - Strongest:

  • Didn’t even START filling the gap from Monday
  • SPY got partial gap fill but NQ said “nope”
  • Balancing above gap = best case for bulls

SPY (ES) - Bullish failure:

  • Got partial gap fill Thursday/Friday
  • Failed to complete the fill
  • Friday made lower low that filled more gap, then reversed
  • This is a bearish failure (bears failed)
  • Still holding over prior ATH structure point of control = acceptance of higher prices

IWM (RTY) - The weakest index, but even here:

  • Thursday: Broke Wednesday’s low by 6 cents, couldn’t reach target (value area high at 24,088)
  • Friday: Broke Thursday’s low, again couldn’t reach target
  • Two consecutive days of lower lows, both FAILED to reach target
  • This is very weak selling

What this tells us: Even the best short candidate (IWM) is not giving bears anything. If the weakest index can’t give bears a proper sell-off, bulls are in control.

The Point of Control Concept

All major indices are holding above the point of control of their prior all-time high structures.

What does this mean?

  • Point of control = where most volume traded in a range
  • Holding above it = acceptance of higher prices
  • Only a problem if we break AND hold UNDER point of control

We’ve seen this repeatedly: Hold PC → balance above → no problem. This rally has done this over and over.

Bitcoin Update

Weekly inside bar broke to the bull side Friday (closed above inside bar high).

Current status: Scouting weekly higher low after prior break and retest

Key resistance zone: $72,800-$73,800

  • Bulls need to reclaim this zone for trend continuation

Political catalyst: Election outcome could drive direction

  • Trump win: Could be bullish (policy speculation)
  • Harris win: Could still be bullish (buy the rumor, sell the news already played out)

Setup: Watching for weekly higher low confirmation.

Affirmation vs Confirmation

Important concept I want to emphasize:

I use “affirmed” not “confirmed” - nothing is 100% confirmed in markets.

Affirmation = signal being validated in the moment, you can keep betting on it.

The moment it’s not affirmed, let it go. Strong convictions held loosely.

Example: This doji needs a break under prior week’s low to be “affirmed” as a reversal. Until then, it’s not affirmed.

Don’t predict, REACT. We can read context but should be willing to change our mind if price action doesn’t affirm our thesis.

Pattern Trading Weakness

Confession time: I don’t love trading candle patterns (doji, hanging man, etc.) without structural context.

Why?

  • Lends itself to a predictive mindset
  • Patterns alone create many false signals
  • Rather than predict, should react to price action within context

The fix: Always add structural context:

  • Where are we in the bigger picture?
  • What are key support/resistance levels?
  • What’s the Fear & Greed reading?
  • How are sectors rotating?

Pattern + Context = Edge Pattern alone = Coin flip

Risk Management: Best Short is Still Long

Even if you want to be bearish, the evidence isn’t there:

Weak selling across the board:

  • Gaps not filling (NQ) or partial fills failing (SPY)
  • IWM (weakest index) seeing two consecutive lower lows fail to reach targets
  • Holding above all point of control levels
  • Fear & Greed still in fear zone (not where tops are made)

Personal position: I was looking to short IWM (offset long tech exposure). Lamont’s preference for shorting small caps when bearish.

Result: Not working at all. Even the best short candidate isn’t cooperating.

What this means: If your best short idea isn’t working, stop fighting it. The best short position right now is still being long.

What To Watch

Bulls need:

  • Continue holding above prior ATH structures’ point of control
  • Gaps to stay unfilled or failed fills to hold
  • Sector rotation to continue (not all sectors weak simultaneously)

Bears need (for reversal affirmation):

  • Break prior week’s low
  • Complete gap fills with acceptance
  • All sectors weak at same time
  • Fear & Greed into greed/extreme greed (then reverse)

Current state: None of the bear requirements are happening.

Ticker Watchlist

Strong Bullish:

  • NASDAQ (NQ/QQQ): Strongest index, no gap fill attempt, holding ATH breakout
  • SPY (ES): Partial gap fill failed, holding above ATH structure despite sell the news

Weak But Bullish Bias:

  • IWM (RTY): Sellers failing badly even on weakest index = actually bullish for market
  • DOW (YM): Waiting for pullback to trade zones

Cautious Bullish:

  • Bitcoin: Weekly inside bar broke bull, scouting higher low, watching $72,800-$73,800 resistance
  • TSLA: Daily inside bar, 4-hour consolidation, cup & handle developing

Bullish:

  • Hyperscalers (MSFT, GOOGL, AMZN, META): Real revenue unlike dot-com, AI deals continuing

Bottom Line

Sell the news event happened as expected (FOMC 25bp cut), but sellers are WEAK - couldn’t create meaningful damage.

Five reasons this doji is not a reversal:

  1. Doji in blue skies without overhead resistance ≠ problematic
  2. Needs affirmation (break prior week low) which hasn’t happened
  3. Gaps not filling (NQ untouched, SPY partial fill FAILED)
  4. Even weakest index (IWM) seeing seller failure - couldn’t reach targets on two consecutive lower lows
  5. Fear & Greed still in FEAR zone (major tops made at greed, not fear)

All indices holding above prior ATH structures’ points of control = acceptance of higher prices.

Strategy: Continue as cautious buyer, not aggressive seller. Don’t predict reversals based on one candle pattern - REACT when price affirms.

Bulls still climbing wall of worry successfully. The market is telling you to stay long, not fight it.

Note: I’m a member of The Chart Guys private Slack community and highly recommend it for anyone serious about learning technical analysis.

This is my personal analysis for educational purposes only. Not financial advice. Trading involves significant risk including potential loss of capital.