It’s almost comical how well the reversal pattern has been playing out on SPX. For several weeks in a row now, SPX has tagged the expected move early in the week and then ended up unchanged or barely changed for the week.

This week has been no exception to that pattern. Tuesday we broke the upper end of the expected move, made new all-time highs and by Wednesday morning SPX was only up 9 points for the week – basically unchanged.

While it did recover into the close, it is safe to say that the pattern has been holding. The best trade to make lately has been to reverse the market when it hits the expected move. Long on the downside touches, short on the upside breaches.

If you remember the end of my post yesterday, the key levels to the downside coming into today were 7765 and 7720. Nearly both came into play today. SPX made a low of 7731 this morning and then rallied back to close exactly at 7765 on the dot.

While the candles on the daily chart have not been super bearish, the reversal is clearly visible and it seems that the most recent uptrend is just about invalidated at this point. SPX would need to build some serious momentum again to reach 7844, or it would need a really bullish tweet.

The other takeaway from my post yesterday was the question about which side were you on, the bulls or the bears. The grey box was broken out of earlier in the week and then SPX attempted to break out of it again yesterday. The question was whether the breakout would sustain or did we just witness a lower high.

Well there is no denying the lower high was followed up by a lower low, so it is clear which side won that debate. SPX is comfortably back inside of the box for now.

Friday’s have generally been bullish for the past several months and tomorrow ends yet another week. A week that was quiet on the calendar, but perhaps not in price action.

The market has been ‘easier’ to read lately because of how pattern driven it has been. Eventually that will end and it’ll be back on track to fool us all. For the time being, enjoy the quiet predictability.

7800 and 7730 are the important key levels tomorrow.

Good luck!