The Charts Called This Selloff Weeks Ago. Here's What They're Saying Now

Why It Matters

If the chart signals hold, equity and ETF investors could face further downside, prompting portfolio rebalancing and increased demand for protective options.

Key Takeaways

• SPY shows distribution top, signaling bearish shift
• IWM small-cap pattern fails, confirming downtrend
• Counter‑trend rallies sold; put options favored
• Global ETFs EEM and EFA break support levels
• Tim Knight recommends September in‑the‑money puts

Pulse Analysis

Technical chart analysis has re‑emerged as a practical tool for traders seeking early warnings of market turns. Tim Knight’s recent breakdown of SPY, IWM, QQQ, EEM and EFA highlights classic patterns—distribution tops, failed trend lines and support breaches—that historically precede sustained sell‑offs. By focusing on price action rather than lagging indicators, Knight demonstrates how these formations can surface weeks before broader sentiment shifts, offering a proactive edge for investors monitoring equity‑linked ETFs.

For portfolio managers and active traders, the implications are clear: protective strategies must adapt to a potentially deeper correction. Knight’s recommendation to purchase long‑dated, in‑the‑money put options—especially September expirations—aligns with a defensive posture that captures downside while preserving capital for future rebounds. Short positions that profit on up‑days further illustrate how volatility can be harnessed when the market remains in a downtrend, making counter‑trend rallies attractive targets for liquidation.

Beyond the immediate trade ideas, the broader macro environment reinforces Knight’s bearish outlook. Global risk assets, from emerging‑market ETFs like EEM to international funds such as EFA, are already testing critical support levels, suggesting that geopolitical tensions and monetary policy tightening may be amplifying the sell‑off. Investors who integrate chart‑based signals with fundamental analysis can better gauge the timing of re‑entries, manage exposure, and position for a market that may remain volatile through the remainder of the year.

Original Description

Chart pattern analysis, distribution tops, support breakdowns, and global ETF signals — Tim Knight walks through price action across SPY, IWM, QQQ, EEM, and EFA on Trading the Close. Explore how classic trend line and pattern analysis may be signaling a broader market shift, why counter-trend rallies are being sold, and how long-dated in-the-money put options fit into a longer-term bearish framework. tastylive technical analysis.

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00:00 Introduction: What Makes a Chart-Friendly Market

00:32 Why Tim Avoids Indicators and Focuses on Patterns

01:18 When Charts Work and When They Don't

01:54 Bear Case Before the War: Charts Were Already Signaling

02:21 Why Short Positions Performing on Up Days Matters

02:41 Today's Market: Red Across the Board Except Oil

03:15 Dow and Diamonds Approaching Monday's Lows

03:47 IWM Small Caps: Topping Pattern and Failed Trend Line

04:47 Why Tuesday Was the Week's Peak

05:35 SPY Distribution Top: What the Chart Shows

06:14 Why Tim Is Buying September Expirations

07:04 Counter-Trend Rallies in a Downtrend

07:31 Overnight Rally That Perfectly Tagged Resistance

08:01 QQQ: Pattern Not Yet Complete but Weakening

08:52 EEM Emerging Markets: Harder Selloff and Price Gaps

09:42 EFA International ETF: Clean Breakdown Below Support

10:00 Bear Market Outlook: Strength Is to Be Sold

#TechnicalAnalysis #BearMarket #ChartAnalysis #TimKnight #TastyliveMarkets #SPYOptions #IWMOptions #DistributionTop

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