Aside from the first hour of trade, SPX had a pretty boring day. The daily range on SPX today was about 70 points and all of it came within the first hour. The rest of the day was spent straddling the lows, with a lot of choppy price action. MAG 7 certainly weighed the market down today, but not enough to cause a broad sell off.

I ended my post yesterday by saying that the key levels for today were 7530 and 7470. The high on the day today was 7530 and the low was 7460. The upper level held exactly where we expected and the downside level just about held too. SPX did close at 7472.

For the most part, it was a pretty predictable ‘inside’ day. I say inside because we are still trading within the range from the large red candle last Wednesday. We did test the upper end of it, but ultimately rejected. The lower part of that candle is still a full 1% away.

It’s not too far fetched to think that we could test the lower end of that candle since the upper end was rejected today. Heading into tomorrow, if SPX starts breaking below 7460 and 7445, we could possibly be headed towards the lows of last Wednesday around 7400.

That bring us to a more zoomed in version of the price action, further highlighting the important of those key levels. 7460 was tested twice today and held both times, while 7445 was an important swing level last Wednesday. If both of those levels fail to hold, there isn’t much sitting in between there and the lows from a price action perspective.

Of course, dip buyers can step in at any level and that would then become our next key swing point, but for now based on the historical price action, those are the levels to watch for.

Price action and key levels derived from that are nothing but supply/demand zones. They are previous areas where we saw buyers or sellers step in, so the natural assumption is that those levels should be defended, even if temporary.

Today we spent a lot of time in a narrow range other than the first hour which saw a sharper than usual sell off. SPX gave up around 70 points within the first hour of trade and then someone hit the pause button and we did nothing for over 5 hours.

As we head into tomorrow, I expect there to be some break of this holding pattern. Price spent an entire day coiling towards something, and I would be really surprised if SPX is stuck in a 20 point range all day again tomorrow.

7500 and 7530 are the key levels for tomorrow on the upside, while on the downside we have 7460 and 7445.

Good luck!