SPX broke below the expected range today by quite a bit. While this was a low probability event, we still saw it happen. 6000 being rejected yesterday was a sign of how strong the downside momentum was.

The daily chart continues to post a series of red candles. We are now at 6 red candles in a row and have broken past the previous lows. Obviously the chart looks very bearish, but we are also extended outside of the expected move.

Breaches of the expected range often indicate an inefficient market. The market is unable to correctly gauge the expected moves. Usually when this happens, we see an expansion of implied volatility. We are currently experiencing this across the board.

The 15-minute chart shows a pretty strong down move after each rally today failed to catch upside momentum. There was a lot of sideways action today until the end where we ultimately slipped a lot lower than expected.

Zooming in even further to a 5-minute chart, I have highlighted the failed rallies. Each up move results in some sideways action that eventually falls back down. The momentum is still very strong to the downside.

However, we are also extremely oversold almost across the board.

Looking at /ES, we see an extended MACD and oversold RSI on the 15-minute time frame. We are also about 70-80 points away from the VWAP.

/NQ also paints a similar picture, showing extreme oversold conditions.

Overall, the oversold conditions and being below the expected range tells us that there the higher probability is that we get some short term relief before the week closes. Whether the rally sustains or not is yet to be seen, but I expected us to rally back to at least 5900 if not higher on SPX at some point tomorrow.

Meanwhile, NVDA has completely broken down and is fast approaching the lower end of the range. NVDA closed at 120 which is a significant level.

115 is the next important level on NVDA followed by the recent low at 113. If NVDA cannot rally from here, we are likely heading to the next level below.

GOOGL continues to descent towards the new target of 164-166.

Not much to analyze there and it is trending down pretty strongly. We may touch the grey box soon.

TSLA also continues to behave as expected and the greybox is still the target. We could break below 270 very soon.

AAPL has also joined the party once again and is trending with the broader market. The move down is pretty sharp and the next big support level is 230. I do expect that to hold on AAPL.

Overall the trend is bearish but that doesn’t mean there cannot be small rallies in between. So far we have seen every rally being sold off and I think that trend will continue. However, the market is definitely due for a sustained bounce and there is a higher probability of that happening tomorrow.

If the week closes outside of the expected range, I think that will be extremely bearish.

Good luck!