On July 31st the SPX produced a Key Reversal Day, a new 52 week high with a close below the prior day’s low.
The end of month selling also delivered a Key Reversal Week.
The normal expectation was for downside follow thru.
That’s what happened on the Key Reversal Week in mid-July 2024.
Ditto early January 2022.
The signal bar reversal week from mid-February 2025 escaped being a Key Reversal Week by 5 SPX points.
Be that as it may it signaled a Gann crash, a 7 week waterfall decline.
The market shrugged off the Key Reversal Week registered 3 weeks ago.
Not only did was it shrugged off, the SPX eclipsed the high of the Key Reversal week
Last week.
As well the SPX shrugged off a Breakaway Gap below the 20 DMA on August 1st.
That was the first clear break of the 20 DMA since the April low.
The price action seems unequivocally bullish especially in the face of 100 year record divergences with the 1
Does the market even care about technical anymore?
Maybe the analogue to the last ditch rally in 1929 is playing out which takes us into August 24th or so
Because there is a pretty Bull Flag setup left yesterday on the dailies.
As well the daily SPX carved out the narrowest range day of the year yesterday.
Notice the NR 7 Day (narrowest range in 7 days on February 14 two trading days before last spring’s waterfall decline.
Notice the NR 7 Day on March 25th before the heart of the crash.
There was an NR 7 Day on June 4th that preceded a melt-up phase on June 23rd.
Then there was an NR 7 Day on July 24th just prior to the Key Reversal Week.
Contractions in volatility are typically soon followed by expansions in volatility.
The SPX all time high is 6479.61 on August 13 or 648.
That is a Time/Price square-out on an important anniversary the August 12, 1982 bear market low.
My expectation is a 10% sell-off plays out that may take until September to get going.
If I am correct I think many technicians will believe that the top is in.
If we do get the sell-off, my cycle work suggests the likelihood is we get one last rally into November…possibly December..