SPX continued the push higher today, shattering through the upper end of the expected move and to new all-time highs by a decent margin. The previous all-time high was 7816 and today SPX hit 7844. From the lows on Thursday of last week, SPX has rallied over 220 points. This is a pretty strong push for just a few days.

I wrote about two patterns in play yesterday, one being where SPX tends to tag the expected move (upper or lower) early in the week and then reverses later in the week. Well, today is Tuesday and we broke the expected move. If this pattern continues, then we should begin our descent tomorrow and slowly go towards unchanged on the week.

The other pattern was this past Thursday being a higher low and SPX looking like it was about to blow past all key levels to new all-time highs. This clearly happened today and SPX held up pretty much all day. There was a slow drift lower into the close and SPX did close back inside the expected move.

A complete opposite of last week, we now have a series of some pretty strong up trend candles. The pivot from last Thursday is clearly visible on the chart now as SPX sits at all-time highs. I think it’s funny that it still found a way to close inside of the expected move, even if by just 2 points.

While the level did breach intra-day, the theoretical “68% of the time we close within the expected move” continues to hold since technically we closed inside of it today.

The big question heading into tomorrow and the rest of the week is which of the two patterns emerges as the winner? I wrote yesterday about them being conflicting patterns and we have officially hit the point of conflict.

Do we hold the trend that we have seen for the last 2 months and SPX reverses after tagging the expected move? Or does this momentum carry into the latter half of the week and SPX ends up moving over 1 standard deviation?

If the momentum theory is to be true, then tomorrow should just continue to push higher. The market has been shaky on both sides of the tape, unable to sustain momentum more than just a couple of days. We’ve rallied 228 points from low to high between Thursday and Tuesday, just 4 trading sessions.

Is the market out of steam here or is there a push towards 7900 in the cards for this week?

Let’s find out together!

Good luck!