The market finally became just too extended, and gave back control to the hungry bears by day’s end. I pointed out last week that areas of support sit at 740 and 720 for the SPX. It’s quadruple expiration week, so expect volatility.
Today’s reversal back down was a textbook short. We’d been running up with higher lows and higher highs. The last pivot high (A) just missed making a higher high, signalling the first area for a possible short. When the previous pivot low (B) was taken out, that provided another shorting opportunity. If you follow the drop, you’ll then see the SPX try and hold the bottom trendline of the wedge (C) . Once it fails, it drops quickly to the next area of support, usually prior pivots, and the process continues.
We could easily get a test to the upside, so it’s probably some more rangebound trading all week.