The recent action appears to be a classic case of liquidation and positioning unwind—a process that often takes time to fully play out. While it’s possible the unwind has already run its course, history suggests otherwise. Experienced bulls typically wait until this kind of reset shows clear signs of exhaustion before stepping in with confidence.
If we continue to see pressure with the same selling characteristics, it supports a more patient approach when considering swing long setups. A slow, controlled distribution would actually be more bearish than a sharp flush. Positioning unwinds can be painful, especially for those caught overly long, but the recoveries that follow are often just as swift and aggressive.
Current Structure
We’re now forming a multi-week balance between the 6/29 RTH low of 6224.25 and the high of 6451. A downside break with follow-through from this range opens the door to a possible move toward 6000, a full 100% measured extension. That would place us well below the previous all-time high and potentially trigger broader technical concerns. It’s worth keeping that level in mind as a downside scenario, particularly if selling accelerates.
That said, I still plan to be a buyer on dips, especially near key technical areas, but will not hold onto swing positions if price action invalidates the setup. As always, much will depend on the character of both selling and buying.
Key Levels of Interest
- 6198–6200 (ES) This aligns closely with the SPX July low (6177.97). Timing will matter here, especially as ES contract decay sometimes creates divergence between SPX and ES. From a structural standpoint, any LBAF (look below and fail) of SPX 6201 or ES ~6227 would be treated similarly.
- 6169.75–6174.25 (ES) This zone reflects a partial backtest of the prior all-time high and closely aligns with the February highs in both SPX and SPY. It’s also marked by a single print, so watch for responsive buyers here.
- 6128–6131 (ES) This area corresponds roughly with SPX 6100, marking the site of the February OPEX breakdown. It’s also approximately 5% below the RTH all-time high—a key psychological marker.
- 6105.25–6113 (ES) A critical zone that protects the gap from 6/23 to 6/24. While buying here may feel uncomfortable, a failed attempt by sellers to push into this gap followed by a reversal would offer a compelling long opportunity. However, be cautious of any failed backtest of both the prior ATH and this week’s low.
Early in the week
We’ll first watch how Friday’s low and the five-week balance low hold as both are potential LBAF (look below and fail) opportunities. At the same time, we’ll stay mindful of the lower support zones mentioned earlier. On the upside, keep an eye on Friday’s high, particularly into the 6311–6319 area and the 6330s ETH single print. These zones could attract responsive sellers, as Friday’s high marks the lower end of last week’s distribution. A break above would open the door to a gap fill, and we’ll reassess from there. It’s equally important to monitor whether the balance low continues to act as support or if buyers fail to defend it, a sustained break lower could trigger more downside, with significant room toward June’s VAH.
Final Thoughts
Despite the recent volatility, the broader trend remains bullish. There’s still room for a higher low to form on a weekly or monthly timeframe. Until proven otherwise, we’re not in a bear market. Therefore, any upside breakout from this multi-day balance should be viewed as a potential structural higher low—just as the recent downside break effectively ended the prior uptrend.
Stay objective and flexible.