SPX: Pullback in Play, Key Annual Level Tested
The $S&P 500(.SPX)$ is down -1% so far this week, losing its central weekly level of 7,707.1 as anticipated on Saturday and breaching the bearish target of 7,642. The index is currently testing the critical 7,638 zone; if it isn’t reclaimed quickly, the downward move could gain momentum.
Meanwhile, the $Cboe Volatility Index(VIX)$ , which was hovering at year-to-date lows and primed for a bounce, has rallied +13% this week alone.
Once the $E-mini S&P 500 - main 2609(ESmain)$ lost the anticipated Central Daily level of 7,700 overnight, the bearish continuation was triggered to start the month. The E-mini futures found temporary morning support at 7,651 before breaking lower to test the final line of daily defense at 7,627.
All of these levels were modeled yesterday in advance, and the price action confirms how institutional algorithms react to them. Once futures broke their CDL, the anticipated SPX daily support levels came into play during market hours: 7,668 and 7,635 framed price action from the open until 2 PM, when that final daily support of 7,635 broke down and flipped to resistance.
Much like the SPX, the Weekly Compass pointed to a high-probability move for the $iShares Russell 2000 ETF(IWM)$ . While we initially looked for a visit toward 290.6 (-1.1%), today’s price action pushed even lower, nearing 289 for a -1.7% weekly decline so far.
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