$SPX Lost the Key Level. Here’s What Matters Next 📉
On Saturday, we analyzed the technical cracks behind $S&P 500(.SPX)$ price action, and since Thursday, I presented the case for a bounce in the $Cboe Volatility Index(VIX)$ .
Today, the SPX declined in correlation with those two elements.
The central daily level for today (anticipated since Friday; our key line indicating bullish or bearish momentum) was 7,729. Today, the price opened below this level, drifting down toward 7,706 before hitting 7,670, the ultimate low of the day and a level anticipated on Friday if the CDL was lost.
With today’s action, the SPX has lost also its Central Weekly Level (CWL). The unfilled gap at 7,651 continues to act as a magnet, and any bullish move before that space is filled is very likely to face selling pressure.
Price action suggested the possibility of a green beginning of the week, but two events anticipated the expected weakness:
1) The 10 year treasury yield jumped to 5.23%, touching its highest level since 2007. Higher yields act as a significant drag on equities because they increase borrowing costs and provide investors with a highly competitive, lower-risk alternative to stocks.
2) Uncertainty spiked again regarding the safety of oil tankers navigating the conflict-impacted Strait of Hormuz.
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