Mag7 ETF Takes the Lead with Breakout and Follow Through
- Arthur Hill, CMT
Welcome to the Chart Fix!
The Mag7 ETF struggled in June-July, but got its mojo back in August with a breakout. Not only did the ETF break out, but it followed through on this breakout with a strong September. MAGS is even starting to outperform.
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MAGS Forms Bullish Continuation Pattern and Breaks Out
The first chart shows weekly candlesticks for the Mag7 ETF (MAGS) over the last three years. MAGS moved from 28 in Q4 2023 to 71 this month. There were three corrections and one triangle consolidation along the way. The blue lines define these corrections with the pink lines marking the resistance levels. MAGS followed through on each breakout with a move to new highs.
Most recently, MAGS surged to new highs in May and then corrected with a triangle consolidation. Triangles are typically continuation patterns that take their trading bias from the direction of the prior move, which was up in this case. Thus, the triangle is a bullish continuation pattern and the breakout signals a continuation of the bigger uptrend.
The bottom window shows the PPO (5,40,0), which serves as a litmus test for the trend. The PPO turned negative in March-April the last two years as MAGS fell rather sharply. It turned positive just after the breakouts in April 2025 and April 2026. This trend indicator currently signals an uptrend with a positive reading.
This is the first of two reports/videos on the MAG7. The second report analyzes the seven stocks [3]. We identify two clear leaders and two stocks that are setting up bullish. Two charts show excessive volatility, which excludes them from my watchlist. One stock is clearly the weakest, and there is even a bearish setup working. Click here to take a trial and gain immediate access. [2]
MAGS Extends on Breakout and Shows Relative Strength
The next chart shows daily bars with a relative performance indicator. MAGS surged 29% with a strong advance to 70 in May. It then corrected hard with a decline to 61 in June. Despite this sharp decline, the move retraced 61.8% of the prior advance, which is normal for a correction.
Trading was quite volatile in June-July as the ETF produced four price swings greater than 9% (down, up, down, up). A triangle ultimately formed and MAGS broke out in early August. Just as important, MAGS followed through on this breakout with an advance above 70. New highs are expected, and a close below 65 would call for a re-evaluation.
The indicator window shows Price Performance (_MAGS:_SPY) turning positive in September and exceeding its July high. This positive turn means MAGS is starting to outperform again. A triangle breakout and relative strength are a bullish combo.
Click here to take a trial to TrendIvestorPro [2] and gain access to our follow up report covering the seven stocks in MAGS.