We've all enjoyed the last bull market which has occurred over the last year but if something feels different to you now, you're not alone, something is different. Of course most investors are aware of the changing stance in our monetary policy and that fiscal stimulus is no longer occurring. But now these changes are also being reflected in the technical components of the major indices.

The most notable change is that we've broken through support levels and now when the market tries to return to those support levels they will turn into resistance lines that price bounces off of. A large number of people who purchased stock in the last 3 months are now sitting on losses, these are people who most likely thought they were buying the dip on a golden escalator traveling non-stop to the moon. And to be fair, that's exactly what the previous market had been doing for them.

In these situations, investors have a propensity to mitigate risk and sell in order to break even when the price returns back to the general area they bought at. They typically want to rethink their strategy, whatever it was they thought was going to happen, didn't happen.

These large pockets of overhead buyers can be referred to as supply zones since they will probably provide supply into the market as price pierces these pockets of supply. Price will most likely be batted back down at this point.

As this happens the market will do something you never want to see; a technical pattern of lower lows and lower highs will emerge. This is a box that needs to be checked by many investors to officially acknowledge a directional change in the trend, they will begin to adjust their portfolios, take profit, allocate to more short positions.

To overcome this new form of price resistance, we will need a source of demand, some kind of optimism or large amounts of liquidity being injected. But where is that source? it's hard to see anything strong in the short term, monetary policy is tightening, fiscal stimulus has stopped, most of the reopening energy has been exhausted. Now we are left with high levels of debt on the corporate and federal level along with high valuations in equities. 

Retail participation is certainly declining as can be viewed by the near collapse of meme stocks and highly speculative funds like ARKK and sentiment driven assets like BTC.

Now to be clear we aren't calling the top. These technical components aren't sufficient to provide a high level of certainty that we've reached any sort of top in the market. Markets typically continue their bull run for at least a little while after interest rate hiking cycles begin. But what we are saying is that things are changing and not for the better.