Happy Saturday. Check out this week's five best charts, presented just as they originally appeared in the daily notes. Enjoy the rest of your weekend. Best, Frank
Monday, 7/6
SPX Cumulative Advance Decline Line
The consistent positive internals over the last month have continued to pull the cumulative advance-decline line higher. Last week, it blasted to new all-time highs, even as the SPX has stalled.
Again, this is the very scenario we had been looking for if and when we finally saw profit-taking in the areas that had gone parabolic through May.
The next step? Seeing various areas take the leadership baton, allowing this to remain a healthy, broad-based advance, and not reliant on the biggest names to hold things together…
Tuesday, 7/7
BBY– BestBuy Co, Inc. (Chart Trade Idea)
BBY had a huge reaction to earnings back in May. Since then, the stock has held above that sizable gap, but it has yet to make much headway beyond the initial surge, which stalled near the 78 level.
Over the last six weeks, though, BBY has traced out a potential bullish cup and handle pattern, which it is now very close to completing. A breakout above the 78 zone would trigger the pattern and create an initial measured move target near 88. A stop loss at 74 would help define the risk.
Wednesday, 7/8
XBI vs. 200-DMA
XBI Biotech had another strong session yesterday, gaining 1.9% and moving even closer to its early 2021 highs. Needless to say, the ETF is also becoming extended above its 200-day moving average. It now sits about 32% above the 200-day, not quite matching the late 2025 extreme (35%), but getting close.
As is clear, the late-2025 advance continued to accelerate even after reaching similarly stretched conditions, producing higher highs and higher lows, albeit with increasingly jagged price action. Thus, given the magnitude of the current rally, it wouldn’t be surprising to see a pause from a longer-term perspective.
For context, during the parabolic COVID-era advance into February 2021, XBI peaked at roughly 44% above its 200-day moving average. There’s still room before reaching that extreme, but after the latest surge, some digestion would be a healthy development.
Thursday, 7/9
LIT Lithium
LIT has now pulled back to its 200-day moving average for the first time since last summer. At the same time, it is testing key support near the 70 area, highlighted in yellow, which also coincides with the 38.2% Fibonacci retracement of the entire April 2025 through May 2026 advance. The two-plus-month decline from the May high has also pushed the 14-day RSI close to oversold territory, its lowest reading since last April.
Taken together, these technical factors create a meaningful confluence of support. While additional weakness is always possible, the current setup offers an attractive risk-reward profile from a mean-reversion perspective.
Friday, 7/10
DJIA vs. SPX
The DJIA is now overbought on the monthly chart for the first time since late 2024. But like RSP, the DJIA/SPX relative ratio has been making lower highs for years. So far, that has yet to change. (This was one of 30 charts from a special Chart Rundown note.)
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