Chart of the Day - Tuesday, June 25th, 2019

Today's chart of the day was shared on Twitter by Andrew Thrasher (@AndrewThrasher). It's a daily candlestick chart of the S&P 500 index with an RSI, and On Balance Volume indicator on top. The chart highlights the failed breakout that he's seeing in the S&P 500. A failed breakout occurs when price breaks out from a prior high but fails to hold above it. These failed breakouts are concerning to technicians because they trap buyers who bought the initial breakout and they tend to lead to sharp moves in the opposite direction. The fact that both momentum (RSI) and volume diverged while price broke out, is further evidence that this could be a failed breakout. We saw a failed breakout in the S&P 500 at the end of April when the index broke out to new all-time highs but then failed to hold above the October '18 highs, resulting in a 7% pullback in May. We'll have to keep a close eye on this. Bulls will need the S&P 500 to get back above the prior highs.