SPX has an expected move of 201 points heading into the week of June 8. It’s quite obvious that implied volatility has expanded once again. The expected move this week is almost twice as big as last week.

It’s crazy how fast things can turn around in the market and throw everyone off. I still think Friday was a surprise to a lot of people. I don’t think very many people expected NQ to be down 6% or SPX to drop over 200 points. Even if you believed a pullback was coming, I think Friday was a shocker.

As we head into the new week, the upper end of the expected move is around 7585. This is where we see the first structural shift in the market. For the first time in over 2 months, the upper end of the expected move is not at a new all-time high. The market has structurally shifted and is now saying “there is a smaller probability of making a new all-time high this week.”

The expected high for the week only takes us back to Thursday’s high. Remember in previous weeks when the expected low for the week was just taking us back a couple of days? Now we are seeing that with the high. Again, a structural shift.

The lower end of the expected move sits around 7182, which would take us back to the lows on May 4. That means if we touch the lower end of the expected move this week, we will have wiped out all of the gains for the entire month of May – in just 1 week.

I’m not trying to get super bearish, but I am simply just pointing out what the current math shows. Personally, I don’t think this bull run is over and this is likely just a small, isolated pullback. I won’t say I’ll be surprised if we hit the lower end of the expected move, but I would be surprised if we closed outside of it.

Buy the dip didn’t work on Friday, but that doesn’t mean it can’t work this coming week. I think Monday is critical to that theory. There is a good chance we do see some follow through to the downside, especially given how bearish the close on Friday was. But I do expect dip buyers to step in at some point.

The market has emotions similar to that of someone with a personality disorder. On Thursday, we saw a huge gap down and it instantly recovered and the vibes were that a new high is coming. On Friday, it felt like the end of the world and people couldn’t hit the sell button fast enough.

This might be the first crack in the foundation, and the music was finally paused, but I don’t think the party is over just yet. As someone who was more bearish last year than this year, I was burned plenty of times on every little down move last year. Nothing ever became a sustained correction and the market almost always instantly recovered and then some. Maybe it’s capitulation, maybe it’s because bears have always been destroyed, but whatever it is, I guess I’ll take any down move with a grain of salt for now.

If we crack the lower end of the expected move, then perhaps I will have to re-evaluate my stance. But for now, it’s buy the dip.

Good luck!