SPX has an expected move of about 144 points heading into the week of Feb 16. It’s important to note that Monday is a trading holiday, so we are seeing not only an elevated expected move, but it’s also for only a span of 4 days. IV is at the highest level we have seen in weeks, maybe even months.

Last week SPX closed essentially at the lower end of the expected move and saw multiple failed rallies throughout the week. Upside momentum has been unable to sustain, and each push lower ends up making a newer low. SPX seems to be in a bearish trend for the time being.

For the first time in a long time as well, the upper end of the expected move is under 7000. It has been steadily over 7000 for weeks, but that trend has ended.

The upper end of the expected move sits around 6980, just shy of the 6990 key level. The lower end of the expected move sits around 6691. It’s a pretty wide range heading into the week.

I’ve been saying it for a few weeks now that SPX seems to have some unresolved business to the downside. It’s possible that this finally might be coming true. Throughout January, we saw VIX rising with SPX and I think that reality is finally starting to catch up.

At the very least, we are seeing steadily rising IV. Realized volatility has still been relatively tame, as SPX continues to close within the expected move. This week we’ll see if RV catches up to IV, or does IV come back down.

SPX has been stuck inside of this range all year and we are once again testing the bottom end of it. If there is no reversal back to the upside from these levels, there isn’t much sitting below.

If SPX does break below, the first target is 6720 to the downside followed by 6691.

To the upside, 6880 is the first key level.

The cracks in the foundation are finally starting to catch up with the market. Let’s see if we get another recovery rally from these rallies, or is this finally the push lower that can sustain.

Good luck!