SPX spent most of today struggling to get a rally going and a lot of that was in thanks to the Nasdaq selling off. SPX also broke the 7500 key level and briefly flipped negative for the week, before ultimately bouncing back a little and closing back above 7500.

I don’t think the close above means much at this point since the Nasdaq is starting to get heavy. Dip buyers did stepped in and were able to keep things afloat, but to me personally it seems like it was only temporary. The market feels like it is hanging on by a thread.

The daily streak of making new highs was broken today. Up until today, each of the prior 6 candles managed to make a new high for the current rally on the daily chart. Today SPX was unable to do that. This is a minor break of structure on the daily chart, but in fairness it was a difficult streak to keep alive.

The real key structural level on the daily chart is the low of the wick from last Thursday around the 7427 area. We’ll round it to 7425 for the sake of having a nice easy to remember number.

Short term structure has not been broken which is the major take away from today. Even though 7500 did break, SPX held the midpoint of the expected range and also this channel I shared yesterday. For now, this is significant but can that continue? Can the bulls continue to defend important levels?

A break below 7475 tomorrow should in theory trigger further selling towards at least the 7425 area if not the lower end of the expected move.

The market is starting to possibly show some more cracks in the foundation and the AI trade continues to sell off. Major stocks that led the original rally like MU and SNDK are off by 25-30% from their most recent highs. For now, the game of musical chairs continues where we are seeing other mega caps carry the index when some aren’t able to lead. But again, how long can that continue?

We talked about it a little bit last week where we are seeing some trillion dollar companies sell off while others rally, and it is leaving SPX largely unchanged for the day.

We are seeing price action where Nasdaq is down 3%, SPX is essentially unchanged, and the Dow is rallying 2%. There is a massive disconnect. A disconnect like this is unsustainable so either we go back to everything rallying together, or everything follows the AI trade and we see a quick flush lower.

July is supposed to be boring and bullish, but I have a feeling things are about to get shaken up.

Maybe the bulls save the day for tomorrow, but the cracks have already started to form.

Good luck!