SPX has kicked off the week with 2 straight down days, though the down moves have been pretty slow and steady for the time being. While VIX did break over 18 again today, SPX has been in a slow drift lower for the past few days.

The expected move coming into the week was around 126 points and SPX has moved roughly half of that as of the close today. We know tomorrow is the big FOMC day, so we could easily move 126+ points just tomorrow.

The daily chart is looking more and more similar to the down move we saw in July with each passing day. It has been a slow drift lower. For the most part, it has been a steady stream of red candles but none of them are significant or really stand out. You could argue that the down move in March was also similar.

Other than a few exceptions here and there, most of the down moves this year have been pretty muted and uneventful. The market is clearly hesitant to go down, which means sentiment and direction are not clearly aligned.

There is still some underlying hope in the market that we get good news from somewhere, anywhere – be it the middle east or the Fed or the Treasury. The hope for good news seems to be keeping things from completely collapsing.

The thing about hope is that either it eventually runs out, or your dreams come true. The former causes capitulation while the latter can lead to complacency. The market is caught in the interesting middle right now.

The craziest part is that our channel from last week is still mostly in tact. We saw a small breach last week but since then have respected the lower bound of the channel and just seem to be clinging onto it for dear life.

A clear, convincing break would be needed before any downside acceleration comes.

Tomorrow is going to be more about sentiment and reactions to FOMC than any technical levels. 7600 was broken today and we closed below it which is significant, but that number is meaningless heading into tomorrow. In theory it would be the key level to the upside

To the downside, we have the lower end of the expected move at 7530. If the FOMC announcement catches everyone off guard and spooks the market, this level will be immediately sliced through.

All eyes are on the fed tomorrow.

Good luck!