SPX pushed lower beyond the expected move today, which was I ended my post with yesterday. The market has been looking like it was going to breach the 1 standard deviation move all week and we finally got there today.

We have not seen 4 red days in a row in quite some time, and the move down so far has been pretty slow and steady. We are dropping on average 30-40 points at a time on SPX and the acceleration hasn’t really come just yet. Is that tomorrow?

The daily chart is the most bearish we have seen since earlier in the summer, close to what we saw in June rather than July. While intraday price action has been choppy, the direction for the last few candles on the daily chart is pretty clear. We sit comfortably outside of the expected move currently.

Below 7580 is also no mans land. There isn’t much support between here and the July lows, at least from a daily chart perspective. If price pushes down further, it could get ugly. We haven’t even seen a big red day yet. Most of the moves down have been pretty muted and boring.

The downward channel I have been sharing all week saw a small breach to the downside today as well. Price did hold for the most part as we almost immediately recovered back inside. The rest of the trading session was spent riding along the lower bound.

If price attempts to break down again and succeeds, then the acceleration I talked about earlier could finally appear. If price bounces, then 7621 (lower end of expected move) becomes the first key level to the upside.

Remember 1 standard deviation moves are on a weekly closing basis. We are outside of it right now, but as you know, 68% of the time we close inside of the expected move. The probability actually suggests that we should see a small rally to close out the week, but the trend and building momentum don’t seem to agree.

Tomorrow will be a battle of momentum vs. probability so it should be a great finish to the week.

I will be out of town for the next few days so there won’t be a post tomorrow or a video over the weekend.

Have a great weekend and see you next week!