The first official reading presents a divided market. Leadership remains visible, financial stress is low and several intermediate relative-strength relationships are constructive. Beneath that surface, however, fewer securities are advancing in P&F X columns and newly emerging bearish signals have expanded. Demand has not disappeared, but it has become more selective while supply is pressing a broader portion of the market.

Leadership has not failed. Breadth has yet to confirm it.

---

The Weekly Conclusion

The market’s present condition is best described as selective leadership under deteriorating participation. Established leaders continue to carry the indexes, but the internal structure shows that the advance is drawing support from a smaller body of securities.

Editor’s Verdict: An index can remain resilient while fewer of its components participate. That condition can persist, but it becomes increasingly dependent on the remaining leaders.

---

Breadth Lost Its Majority

An X column records an advancing price movement under P&F construction; an O column records a decline. Participation below 50% therefore means declining columns outnumber advancing columns. Structurally, the majority has shifted from columns of demand to columns of supply. This does not, by itself, establish a bear market because many securities may remain on earlier buy signals even after reversing into Os. It does establish that demand no longer controls a majority of the underlying securities.

Four markets weakened again during the latest week. Mid-cap participation improved by only 0.3 percentage point and remained below the dividing line. The Nasdaq 100 recorded the sharpest weekly deterioration, falling 11 points to 38.0%. A recovery above 50% across several universes would show demand regaining the majority; continued readings below that level, particularly with lower weekly lows, would confirm that supply remains broadly in control.

Fresh Supply Expanded

The fresh-signal record reinforced the warning. Across the combined S&P 500, S&P 400, S&P 600 and Nasdaq 100 universe, 72 stocks produced fresh double-bottom breakdowns while only 16 produced fresh double-top breakouts. Technology accounted for 28 bearish signals and industrials for 18; semiconductors alone supplied 21 of technology’s breakdowns. The imbalance shows that new downside penetrations were developing at more than four times the rate of new upside penetrations.

These are newly emerging events, not cumulative lists of securities that have been weak for weeks. A double-bottom breakdown forms when an O column falls beneath the preceding O-column low. The earlier low marks a level at which demand had previously absorbed the available supply. Penetration of that level indicates that sellers have returned with sufficient force to overcome that support and record a new P&F sell signal. Follow-through into lower boxes would strengthen the bearish implication. A rapid reversal into Xs, followed by recovery through the preceding rally column, would weaken it and raise the possibility of a failed breakdown.

Existing structure was less uniformly bearish. The S&P 500’s core bullish and bearish pattern counts were nearly balanced at 167 versus 164, while the TSX retained the strongest bullish prevalence at 109 versus 58. Broad Bullish Percentage readings also remained above 50%: S&P 500 61.40%, Nasdaq 100 59.41%, NYSE 55.24% and TSX 64.06%.

The distinction matters. Many established buy signals have survived, but fewer securities are presently advancing. In P&F terms, the market has moved from broad forward progress toward a corrective condition inside an older bullish structure. Supply has expanded without yet destroying that structure. Further deterioration in the Bullish Percentages would provide the next important confirmation that the correction is reaching established buy signals rather than merely reversing active columns.

Leadership Has Narrowed, Not Disappeared

Seven of the eleven sector ETFs outperformed SPY over 13 weeks, compared with five over four weeks and only three over 26 weeks. This progression describes leadership that is visible over the intermediate horizon but has not yet become a durable long-term condition. Sector Bullish Percentage remained strongest in energy at 80.95%, health care at 77.97%, financials at 73.68% and consumer staples at 72.22%. Utilities stood at 38.71%, communication services at 45.00% and industrials at 48.10%.

The broad ETF screen retained 46 core leaders against only two core weaknesses. International and value-oriented funds, software and cloud, silver miners, agriculture and high-yield credit supplied the principal leadership clusters. FUTY and WGMI were the two weakness funds. Demand therefore remains concentrated in identifiable groups rather than absent from the market. The weakness is not the lack of leadership; it is the failure of that leadership to draw broad participation behind it.

These are prevalence screens, not automatic recommendations. Leadership is most dependable when the price chart, relative-strength chart, group condition and broad market agree. A publication setup therefore requires manual review at the locked Zerblix settings, evidence of follow-through and a visible level at which the interpretation would weaken or fail.

Confirmed Setups Under Review

SIL: intermediate leadership meets near-term supply

Silver gained 14.63% over four weeks but declined 4.30% during the latest week. Despite that pullback, SIL, SILJ, SLVP and SLVR remained clustered in the ETF leadership screen, while Gold Miners Bullish Percentage improved 3.63 points to 68.49%.

Demand continued to control the column and carried the P&F plot to 101.78, matching the earlier May P&F high. Outside the close-only P&F chart, SIL traded as high as $104.49 on August 28, marginally exceeding May’s $104.10 intraday high. However, the fund closed at $99.14, so the intraday move did not print the 103.82 box or confirm a P&F breakout. A later close sufficient to print 103.82 would clear the matched P&F highs and establish a Double Top Breakout.

IGV: software retains selective demand

IGV appeared with CLOU, FDN and WCLD in the ETF leadership screen. At the stock level, ACN, APP, FIVN, MSFT and WDAY generated fresh bullish breakouts. This does not establish healthy technology breadth. It identifies a recognizable pocket of demand inside a sector experiencing substantial internal deterioration.

IGV remained in an X column and retained its August 3 Double Top Breakout. The original breakout occurred at 95.91, where demand overcame the preceding X-column high of 94.03—a level at which supply had previously stopped the advance. The subsequent rise to 110.17 demonstrated meaningful follow-through. A print at 112.38 would extend the current X column and provide further evidence that buyers remain willing to absorb supply at higher levels. A decline to approximately 103.82 would produce a normal three-box reversal into Os. Such a reversal would mark the return of supply but would not, by itself, invalidate the breakout. A later print at 86.87—below the preceding O-column low of 88.61—would generate a Double Bottom Breakdown and materially weaken the immediate bullish structure.

WGMI: crypto-miner weakness is chart-confirmed

Digital assets demonstrated why daily detection and Friday confirmation must remain separate. Fourteen digital-asset products appeared in Thursday’s leadership screen, including IBIT. None remained Friday, while WGMI entered core weakness. BlackRock reported that IBIT’s August 28 NAV declined 3.13%.

WGMI turned lower after reaching an intraday all-time high of $76.94 in June. Because the Zerblix P&F chart uses closing prices and 2% box scaling, that intraday extreme was not plotted directly; the highest completed P&F box was 71.26. Since then, supply has produced a succession of lower rally peaks and downside penetrations at progressively lower support levels.

Secondary Watchlist

Cross-Asset and Historical Context

The remaining asset classes did not confirm an indiscriminate flight from risk. EWT advanced 11.76% over four weeks and 3.45% during the latest week, but did not satisfy the stricter combined price-high and P&F condition. HYG remained constructive relative to IEF, TLT improved 1.01% for the week and financial stress remained low. UUP’s 1.00% weekly gain left it almost unchanged over four weeks, suggesting a rebound rather than an established intermediate currency trend. Real estate remained comparatively weak, with VNQ down 1.73% over four weeks.

August strength in SLV, GLD and EWT was also unusually large relative to their completed 5-, 10-, 15-year and full-history August averages. Seasonality supplies context, not confirmation; current supply and demand must take precedence.

What Would Confirm or Weaken the Warning?

The breadth warning would strengthen if participation remains below 50%, bearish breakouts continue to exceed bullish events, broad BPI readings begin falling materially or weakness expands beyond FUTY and WGMI. That sequence would show the present column deterioration spreading into the market’s older signal structure.

The warning would weaken if several markets recover majority X-column participation, the fresh-signal imbalance narrows, small caps and equal-weight indexes improve, and the remaining leaders produce follow-through accompanied by broader sector participation. Such action would indicate that demand is no longer confined to isolated groups and is again gaining control of the broader list.

Bottom Line

The August 28 evidence does not support an indiscriminate bearish conclusion. Leadership remains visible, credit is orderly and financial stress is low. It also does not support treating index resilience as proof of a healthy broad advance.

For swing-to-intermediate traders and investors, the practical response is disciplined selection. Existing leaders can be respected while their structures remain intact, but new exposure should require confirmation and an observable weakening level. Continued breadth deterioration would indicate that the remaining leaders are becoming increasingly isolated.

Confirmation remains more valuable than attempting to identify the perfect turning point.

Methodology and Sources

All market readings use the official Friday, August 28, 2026 close unless another date is stated. Stocks use 1% boxes; ETFs and indexes use 2% boxes; relative-strength ratios use 1% boxes. All use three-box reversals and daily close-only data. Fresh signals were true on August 28 and false on the preceding scan; R01/R02 and Pattern Pressure are prevalence measures. Returns use verified adjusted closes in Zerblix Master Workbook v35. Incomplete August 2026 data are separated from completed historical samples. Financial-stress data are from the Federal Reserve Bank of St. Louis; IBIT fund data are from BlackRock.

Subscribe now

Disclaimer

This publication is for informational and educational purposes only and does not constitute investment advice, a recommendation, an offer or a solicitation to buy or sell any security or financial instrument. Point & Figure signals, relative-strength readings, seasonal tendencies and historical relationships can fail. Past performance does not guarantee future results. Readers should conduct their own research and consider their objectives, financial circumstances and risk tolerance before making investment decisions.

The Zerblix Approach

What is the goal of Zerblix Report?

Zerblix is designed to reduce the influence of short-term market noise and concentrate on changes that matter over an intermediate-term horizon.

The research asks whether participation is expanding or deteriorating, where leadership is developing, whether that leadership is receiving Point & Figure confirmation, and what risks could weaken the interpretation.

The objective is not to predict every market turn or capture the exact top or bottom.

Confirmation over perfect entry.

What is the primary time frame?

Zerblix is primarily intermediate-term, rather than intraday.

Daily observations can reveal developing changes, but the official research record is centered on the Friday close. Midweek readings are used for monitoring and timely commentary when conditions materially change.

This gives market structure enough time to develop without ignoring meaningful deterioration, improvement, or rotation occurring during the week.

Why does Zerblix use several indicators instead of one?

Breadth: asks how widely a move is being supported.

Relative strength: asks where leadership is developing.

Point & Figure: evaluates price structure and changes in supply and demand.

Concentration: asks whether headline index strength depends increasingly on a small group of securities.

Risk and intermarket measures: test whether other parts of the market confirm or contradict the equity evidence.

The purpose is not to accumulate indicators until they support a preferred conclusion. Confidence should increase when independent evidence agrees.

Point & Figure

Why does Zerblix use Point & Figure?

Point & Figure helps filter insignificant price fluctuations and concentrates attention on meaningful changes in price structure.

X-columns represent rising prices; O-columns represent declining prices. Breakouts and breakdowns identify levels at which demand or supply has exceeded a previous structural reference.

Structure → Confirmation → Follow-Through

This makes P&F particularly useful for an intermediate-term process rather than reacting to every daily fluctuation.

Why use percentage boxes and a three-box reversal?

Percentage scaling allows the chart’s sensitivity to adjust proportionally with price.

The three-box reversal requirement helps prevent every minor counter-move from creating a new column. Price must move sufficiently in the opposite direction before the chart recognizes a reversal.

Stocks: 1% / 3-box

ETFs and indexes: 2% / 3-box

Relative-strength ratios: 1% / 3-box

These settings support the intermediate-term research objective rather than attempting to maximize the number of signals.

Do I need to understand Point & Figure to read Zerblix?

No.

Readers do not need to become Point & Figure specialists to use the research. Zerblix explains what matters in practical terms: whether structure is improving or deteriorating, whether demand or supply is gaining control, whether independent evidence confirms the change, and what would weaken the interpretation.

Readers who want to study the mechanics can begin with StockCharts ChartSchool - Point & Figure Basics.

Does every bullish or bearish P&F signal mean I should trade?

No.

A P&F signal establishes a change in price structure. It does not establish that every surrounding condition supports a trade.

A more compelling setup may also have supportive market conditions, improving group breadth, favorable relative strength, structural confirmation, persistence, and a clearly identifiable point at which the interpretation would fail.

Zerblix therefore distinguishes signal discovery from confirmation. A technically valid signal can still fail.

Why doesn't Zerblix try to predict exact tops and bottoms?

Because an exact turning point is not required to participate successfully in an intermediate-term move.

Markets can remain extended, concentrated, oversold, or technically stretched considerably longer than expected. Attempting to identify the precise turning point can introduce false precision.

Zerblix instead looks for evidence that control is actually changing. That may sacrifice the first portion of a move in exchange for stronger confirmation.

Is getting the perfect entry price the main objective?

No.

For an intermediate-term approach, the larger structure, time horizon, position risk, persistence, and invalidation point generally matter more than capturing the lowest possible entry.

Two investors can enter the same security at different prices while expressing essentially the same intermediate-term thesis. An earlier entry into weak structure is not necessarily superior to a somewhat later entry supported by stronger evidence.

Breadth & Participation

Why does breadth matter?

A headline index can advance even while participation underneath it deteriorates.

Breadth asks whether strength or weakness is being distributed across a meaningful portion of the market.

Strong price + broadening participation

Strong price + deteriorating participation

A concentrated advance can continue. Narrow breadth is therefore not automatically bearish. Its significance increases when deterioration persists or when other independent measures begin to confirm it.

What is X-column participation?

X-column participation measures the percentage of securities in a defined universe that are currently advancing in Point & Figure X-columns.

Current breadth condition: How much of the market is presently advancing on its P&F structure?

X-columns represent rising prices, while O-columns represent declining prices. X-column participation should not be confused with the number of securities generating new P&F buy signals.

What is a Bullish Percent Index?

The Bullish Percent Index, or BPI, measures the percentage of securities in a defined universe carrying active Point & Figure buy signals.

BPI: How many securities carry established P&F buy signals?

X-column participation: How many securities are currently advancing in X-columns?

A security can remain on an established P&F buy signal while temporarily declining in an O-column. Their agreement can strengthen an interpretation; their disagreement can also provide useful information.

What is Pattern Pressure?

Pattern Pressure is a Zerblix-derived measure used to summarize the balance between selected bullish and bearish Point & Figure pattern prevalence within a market or sector.

It is not the same as BPI, X-column participation, or fresh-signal flow.

The measure asks whether the existing population of selected P&F patterns is becoming more heavily weighted toward demand or supply. Pattern Pressure is interpreted as one structural breadth layer, not as a stand-alone market forecast.

What is the difference between a fresh signal and an existing signal?

A fresh signal has just occurred. An existing or prevalent signal may have been established days or weeks earlier and still remain valid.

Fresh signals: measure flow.

Prevalence: measures existing structure.

The two should not be added together or described as though they represent the same information.

Why track signal follow-through?

A breakout is the beginning of the analysis, not the end.

Zerblix follows qualifying signals at subsequent checkpoints to determine whether they remain valid, weaken, reverse, or fail.

Research question: Are recent signals producing durable follow-through?

A market producing many signals that quickly fail is structurally different from one producing fewer signals that persist.

Leadership & Relative Strength

Why does relative strength matter?

Absolute performance tells us whether an asset is rising or falling. Relative strength asks whether it is performing better or worse than the benchmark against which it is being compared.

A sector can rise while losing relative strength. Another can remain below its longer-term benchmark while beginning to improve rapidly.

Relative strength helps identify where market sponsorship is emerging, strengthening, established, or fading.

Why use 4-, 13-, and 26-week relative strength?

4 weeks - Detection: Identifies recent acceleration or deterioration.

13 weeks - Confirmation: Tests whether that change is developing into a persistent intermediate trend.

26 weeks - Context: Shows whether longer-term leadership is already established.

Looking only at the shortest horizon can mistake a temporary rebound for genuine leadership. Looking only at the longest horizon can identify a change too late. The combination helps distinguish an emerging rotation from established leadership.

Risk & Confirmation

Why look at credit, financial stress, commodities, currencies, and other markets?

Equities do not operate in isolation.

Credit conditions, Treasury behavior, currencies, commodities, and financial stress can either reinforce or contradict the evidence coming from stocks.

These markets are used primarily as independent confirmation layers. Cross-asset evidence changes the degree of confidence placed in the equity interpretation; it does not automatically replace the equity signal.

Why track market concentration?

A capitalization-weighted index can remain strong because a relatively small number of very large securities exert disproportionate influence.

Zerblix compares capitalization-weighted and equal-weighted markets to determine whether participation is broadening or becoming increasingly concentrated.

Concentration itself is not automatically bearish. Its significance increases when headline indexes remain strong while equal-weight performance and broader participation deteriorate.

What is the Risk-On Leadership framework?

The Risk-On framework examines selected relationships that can reveal whether capital is favoring more aggressive or more defensive positioning.

These include relationships involving cyclical versus defensive equities, small versus large companies, credit versus Treasuries, technology versus utilities, and equal-weight versus capitalization-weighted equities.

The framework is a regime and confirmation tool, not a stand-alone buy or sell system.

Does seasonality produce buy and sell signals?

No.

Seasonality describes what has tended to occur during comparable historical periods. It does not determine what must happen now.

Zerblix gives seasonal evidence greater weight when current relative strength and P&F structure agree with the historical tendency. When current structure contradicts seasonality, that disagreement is part of the evidence rather than something to be ignored.

Charting & Research Style

What is the best chart type - Point & Figure, line, bar, or candlestick?

There is no universally superior chart. The appropriate chart is the one that answers the research question with the least ambiguity.

Point & Figure: price structure and supply/demand.

Ratio line charts: relative strength and historical comparison.

Bars and compact tables: rankings and exact comparisons.

Breadth charts: changes in market participation.

The chart is a tool. The objective remains to understand the larger structure while maintaining disciplined risk management.

Why doesn’t Zerblix rely heavily on candlestick patterns, oscillators, or indicator-heavy charts?

Those methods can be useful. Their limited use in Zerblix should not be interpreted as a claim that they are invalid.

Priority: Structure → Participation → Leadership → Confirmation

Another indicator or charting technique is most useful when it contributes information that is not already being captured. The objective is to reduce analytical clutter rather than increase it.

Do you need an oscillator to determine whether a trend is exhausted?

No.

Many charting platforms provide momentum oscillators, overbought/oversold studies, moving averages, and other tools. Their use is a matter of analytical preference.

Zerblix does not require an oscillator to declare that a trend is exhausted. A potential reversal becomes more meaningful when observable evidence begins changing through price structure, participation, relative strength, breadth, and follow-through.

Markets Covered

What asset classes does Zerblix follow?

The primary focus is stocks and ETFs.

Research also uses ETFs and market indexes to examine U.S. large-, mid-, and small-cap equities; Canadian equities; U.S. sectors; developed and emerging international markets; Treasuries and credit; commodities and precious metals; real assets; currencies; and selected digital-asset exposure.

The purpose is not to trade every asset class. The broader universe helps determine where leadership, deterioration, and risk are developing across markets.

Are all Zerblix indicators standard published indexes?

No.

Some inputs are established market measures. Others are rules-based measures constructed specifically for Zerblix research.

Established/source measures: Bullish Percent Indexes; Point & Figure signals; financial-stress data.

Zerblix-derived measures: Pattern Pressure; Risk-On Leadership Score; Market Concentration Gap; Relative-Strength Participation; Signal Survival Rate.

Derived measures are intended to organize evidence systematically. They should not be confused with official exchange indexes or stand-alone trading systems.

The Simplest Explanation

What is the easiest way to understand the Zerblix methodology?

Structure → Participation → Leadership → Confirmation

Structure: What are price and Point & Figure structure telling us?

Participation: How much of the market supports the move?

Leadership: Where is relative strength concentrating?

Confirmation: Do independent signals agree, and does the move continue to show follow-through?

Risk is considered throughout the process.

No indicator stands alone. Confidence increases when independent evidence agrees.

Where can I learn more about Point & Figure?

Readers who want to study the mechanics behind the charts can begin with StockCharts ChartSchool - Point & Figure Basics.

Zerblix will continue to explain the practical interpretation of P&F evidence in its research. Technical mastery of Point & Figure is not a prerequisite for reading the publication.

Reference

StockCharts ChartSchool - Point & Figure Basics
https://chartschool.stockcharts.com/table-of-contents/chart-analysis/point-and-figure-charts/point-and-figure-basics

StockCharts ChartSchool - Bullish Percent Index (BPI)
https://chartschool.stockcharts.com/table-of-contents/market-indicators/bullish-percent-index-bpi

ZERBLIX REPORT • EVIDENCE FIRST. CONFIRMATION BEFORE CONCLUSION.