Coming into today, we explored the massive call wall around 7775-7790 on SPX. While we didn’t exactly tag those levels today, it was the high from yesterday and for the time being that level has proven to be a brick wall. The level was rejected and SPX broke down today, even breaking below 7700.

SPX is once again well within the expected move after spending 2 days outside of it. The rally seems to have lost steam and I think we can put the theory of this being similar to the last FOMC to rest. For now, the pattern has been broken and SPX was unable to rally to new highs even though NDX did.

While SPX is still up for the week, the chart doesn’t look as bullish as it did just 24 hours ago. Most of Monday’s candle has been erased, but the gap up still exists and will be the important level for the rest of the week. Above it, we can assume upside drift and below it we can assume downside pressure.

Over the past few weeks, we’ve seen a couple of instances where SPX tagged the lower end of the expected move early in the week and then was nearly at the upper end of the expected move a few days later.

Are we headed for the opposite this week? SPX tagged the upper end of the expected move early in the week and now it looks like we are heading straight down.

I shared this chart yesterday and now we can see a clear rejection of the grey box. This area was previous a struggle zone for SPX and it also aligned perfectly with the call wall from our gamma exposure table. The market played out as expected where that wall held, and price has now been flushed lower.

I’ve also marked via the red line the gap open print from Monday morning. This level is around 7690 and will be the first key level to the downside. If it breaks, then 7650 could be in play.

I asked earlier in the post if this week is one of those weeks where we tag the upper end early and end up at the lower end mid-late week. While on any other week I would say yes, I am hesitant to take that trade this time around.

President Xi is visiting the US this week and we can assume some sort of joint press conference between the 2 Presidents either tomorrow or Friday. Regardless of your politics or stance on the situations at hand, I think most traders would agree that the two of these on screen together behind a podium will likely be bullish.

I find it hard to believe they would say anything that would crush the markets. While the press conference rally could be short lived, it’s hard to ignore the possility of the rally itself.

7690 and and 7750 will be the key levels for tomorrow.

Good luck!