SPX saw a little bit of a Friday bounce today, but key levels to the upside were rejected – most notably 7700. SPX nearly tagged this level earlier today and then saw a pullback into the close.

SPX was down roughly 1.35 standard deviations for the week, making it one of the first downside breaches in a while. Most of the week had a pretty strong downside bias and I don’t really think today was any exception despite the little bounce.

The up move today had little to no momentum and was pretty choppy for most of the day, and I think rejecting 7700 is pretty bearish. Friday/Monday tend to be bullish so we could see another run up towards that level early next week, but I have a feeling the trend has shifted to being bearish in the very near term.

The daily chart is still bearish, even more so with today’s candle. Small candle, nearly entirely within the range of yesterday’s red candle, and we have a long upside wick which suggests rejection of upper key levels. We nearly retested the lower end of the expected move as resistance, and then fell back lower.

The daily chart seems to be making lower highs into lower lows. It looks like a chart that is rolling over and thecurrent expectation is a lower low very soon.

On the shorter timeframe chart, our channel that we have been tracking for a few days continues to remain intact. SPX attempted to test the upper bound twice today and so far, even the second attempt has rejected. That final 15 minute candle looks pretty bearish.

If Monday opens roughly 15 points higher, then the channel will be broken and invalidated. Based on the close today though, the expectation is that we make our way back towards the bottom half of the channel, if not the lower bound.

It might not have felt like it, but this was one of the more statistically bearish weeks we’ve seen in a while. We breached the lower end of the expected move early in the week and then only went lower.

We might not have the downside velocity or momentum yet, but I feel like it is building up and coming soon. VIX might have been down today, but it was pretty resilient most of the week. Volatility will return back into the market sooner than later as well.

Hopefully the quiet weeks are behind us as summer winds down. We are heading into what is generally considered the most volatile 2 months for the market, so I really hope it lives up to that hype.

I’ll have more over the weekend, covering the expected move for next week along with other key levels.

Stay tuned!