Weak Spots in a Bull Market

Even the strongest bull markets have their soft spots.

And right now, a few key risk-on areas are starting to wobble.

What really stands out to me is the persistent weakness in home construction stocks.

They’ve been rolling over for weeks, currently hanging by a thread at a key confluence of support.

Buyers haven’t been able to step in and find their footing, making this an important test for one of the most important industry groups of the market.

If this weakness continues, it could start to bleed into other cyclical areas — and that’s where things could get messier.

Then there’s Bitcoin, which just lost its VWAP anchored to the April lows.

If buyers don’t show up soon — and fast — the damage could start to spread across the crypto space.

If sellers are going to show up more broadly, these are the two groups most likely to lead the way lower.

So if you’re looking for a bear case in a market that still looks strong, this is where I’d start watching.

Steve will dive deeper into this theme on today’s Open Bar Show at 9:45 AM ET.

Don’t miss the chance to trade the market open alongside him — click here to join live.

Stay sharp,

Alfonso De Pablos, CMT

Director of Research, All Star Charts