Volatility stepped into the market today and SPX collapsed below key support levels, making new lows for the month of July. As we wind down the week and head into the final trading days of the month, the consecutive winning streak for July seems to be in jeopardy.

SPX gapped down nearly 100 points this morning and spent most of the day pushing lower. There was a rally towards the end of the day and SPX did reclaim 7400 after being below it most of the day. Was the small rally into the close the start of a longer recovery or was it just simply short covering?

The daily candle is a doji but it doesn’t paint the full picture about today on its own. We have long wicks to both the upside and the downside. The reality is we actually did have a failed rally in the morning and then prices pushed lower throughout the session until there was another attempt at a recovery into the close.

50 is the number of the day. SPX is down about 50 points for the week currently, and at the lows today was about 50 points away from the lower end of the expected move.

In the weekend video, I spoke about the quiet downside bias in the market, which was reflected by the expected range. The upper end of the expected move took a step down and the lower end was signaling new lows for the month.

While we didn’t tag the 1 standard deviation level on the weekly move, SPX did make some significant progress towards it today.

Yesterday SPX was at the higher of the two grey boxes and I wrote about how it seemed like a failed breakout. The question that was asked was if we were headed back towards 7420. The answer was clearly yes, and then some. SPX made it as low as 7376 today, clearly outside of the 7420 area. And if you notice closely on the chart below, there was actually a retest of that grey box / 7420 area early this morning before price headed back down.

The interesting thing is that the pop back up towards the end brought us back within range of that grey box. The question for tomorrow is will there be a retest or even retake of that level?

Those boxes have been the gravity points for the market over the past few weeks. While there have been breaches, price has eventually snapped back inside and any price action outside of them has been unable to sustain momentum.

SPX is about 80 points from the lower end of the expected move as of the close today with just 1 more trading day to go. Friday’s have been a toss up lately, but it’s summer, it’s July and we just had a massive sell off. There is a part of me expecting a bounce tomorrow just for those reasons, even if July has been a disappointment for the bulls so far.

Let’s see what happens!

Good luck!