To The Moon

$SPDR S&P 500 ETF Trust(SPY)$ ’s monthly BX trender just closed red.

70% of the time that means a dip. 30% of the time it means a crash.

Here’s how I see things playing out

We’ve officially broken the $758 swing low on the daily time frame, which is not ideal. We’ve been covering this zone for the past couple of weeks, and it was a very important level short term.

There’s a chance price bounces from here and sweeps back up to all-time highs much sooner than I’m expecting. Historically, though, that only happens about 20% to 25% of the time, so I’m not banking on it.

Now that support has broken, if price can’t get back above $760 within the next week, it will most likely keep redistributing down toward $740, the lower smart money zone on the daily.

My biggest concern right now is that the monthly BX trender closed red.

When we switch over to the monthly chart, you’ll notice that over the past decade, a red monthly BX trender doesn’t necessarily mean a total market crash. (image 2)

Normally, it means a continued correction of about 5% from where we are.

The most extensive pullback was January 2022 to October 2022, when the market went into a full bear market for multiple months before finding a potential bottom. Before that, there was 2020, where the market dropped about 26% because of COVID, and a correction in 2018, where it dropped about 12%.

So looking at the past decade, a red monthly BX trender doesn’t necessarily mean the market is going to crash. It does tend to mean that the broader buying pressure is getting sucked out.

The last two times this happened were March 2026 and April 2025. Both times, we saw a continued sell-off for about a month, followed by a V-shaped recovery.

This doesn’t mean we need to go into panic mode. But like I said at the start of this analysis, a continued pullback of 2% to 3% is very much on the table.

Looking back at the decade before that, from 2000 to 2011, there were multiple monthly BX flips. (image 3)

Most of the time, like in 2005 and 2006, price just kept working its way up. But three major pullbacks happened during that decade. The first was the dot-com bubble, when the market dropped about 44% after the monthly BX turned red. Then came the 2008 financial crisis, when the market dropped about 53% after the monthly BX turned red.

I don’t want you to be worried. A red monthly BX doesn’t mean the market is going to crash. That only happens about 30% of the time when the monthly BX turns red.

What we do need to understand is that if the market is going to crash, it will happen during a red monthly BX trender. So when the BX trender is red, we need to be more careful than we are in a bull cycle.

That doesn’t mean we trade any differently. We still focus on smart money zones, and we still focus on quality setups. But there’s no reason to over-leverage positions or load up on call options. When this happens, a higher level of caution comes into my plan.

So with all that said, where does this leave us?

The most important thing to remember is that structure matters more than the cycle or the monthly BX. In every case we talked about where the market bounced after the monthly BX turned red, structure held. In every case where the market went into a serious downturn, structure gave out. So as long as structure holds, I see a low chance of a major 10% to 15% correction in the S&P 500.

On the daily chart right now, there’s a good chance we get another 2% pullback down to about $740. That would be a strong short-term area, and it’s normally where we’d see price bounce. If you use the 33 fair value band on the weekly time frame, that’s a major support too.

If $728 breaks, that’s where we get into serious correction territory. From there, I’d look for a sell-off into the weekly institutional buy zone at $684 to $660, with the smart money zone between $660 and $650. That would fill the downside gap from April 2026.

Like I said, I wouldn’t worry about that yet, because we’re still showing structure on all the smaller time frames. If the smaller time frames start to give out, that’s when we need to be aware that a broader correction could happen.