The August Producer Price Index (PPI) report revealed wholesale inflation grew by 0.4% month-over-month and 5.4% year-over-year. The combination of stubborn inflation and triple-digit oil prices (CL=F: $103.9) fueled bets that the FED will raise interest rates next week, with the current probability sitting at 71%.

Adding pressure to the market, the European Central Bank (ECB) raised interest rates by 25 basis points today to control inflation pressures.

Yesterday I noted that the bearish move was unlikely complete for the SPX, considering a potential gap fill attempt to 7,667. The Central Daily Level (CDL) for today was also shared so they would help to validate direction, indicating that momentum would be bearish below 7,640.4 and bouncy if that level was recovered. If not, 7,603.9 and 7,583.6 were bearish targets posted last night, and today’s price action indeed moved between those two levels since the CDL was lost.

The decline in the SPX is playing out as anticipated in last week’s Weekly Compass 🎯, currently down 1.6% for the week, while DIA stands as another bearish setup cumulating a 2.5% weekly loss 🎯.

Tomorrow brings CPI news at 8:30 AM New York time. A series of indecisive daily candles for the SPX has shaped the weekly decline, the setup remains bearish, and the move does not look complete. The essential levels to watch tomorrow are detailed in the daily plan below, including the Daily, Weekly and Monthly levels. The daily levels help navigate the weekly ones by providing narrower zones where institutional algorithms have proven to react, they also provide early warnings.

Daily Levels in Action:

Reviewing this week’s four-day price action for the SPX, when it lost the Central Daily Level (every day so far), the price has moved in between the lower levels symmetrically. It is clear how institutional algorithms react to these levels. Premium subscribers receive these lines at market close for the next day, and the price levels for tomorrow are provided below.

The chart shows clearly how once the CDL is lost, the support lines shared in advance act as key lines for institutional algorithms, price action and numbers always tell the true, the chart sows the lines that have framed price action every day.

We have studied this week how to use the Setups Blueprint posted every Saturday, it includes using levels/price targets, risk-reward ratios, momentum status, and invalidation levels for all the tickers in our watchlist, the educational content posted this week is here, and today we continue with a third installment focused on the daily dashboard or watchlist tracker posted in the daily market updates.

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Today’s Agenda

• How to use the Watchlist Tracker

• Daily Plan for SPX and ES=F

• Combined Levels for Tomorrow

Let’s begin.

Using the Watchlist Tracker

When you track the SPX alone, it is a completely valid strategy. Focusing exclusively on an individual stock like NVDA, AAPL, or MSFT is also a valid approach. However, there are two distinct implications to this: the index may experience choppy price action without a clear direction, or an individual stock might move against expectations.

This highlights the primary advantage of having all the securities on our watchlist in a single, unified view: you can see daily changes, accumulated weekly changes, and the relative distance to the Central Weekly Levels and Central Monthly Levels for each ticker that we track.

Key Advantages of the Tracker

• Comprehensive Market Visibility: Having a broad, daily view allows you to make informed decisions not just for a single stock, but across all securities on our watchlist. You can identify the main movers of the day/week and assess opportunities.

• Structural Market Clarity: By evaluating securities against their Central Weekly Levels and Central Monthly Levels, you gain a clear picture of each asset’s underlying structure in a single view. As shown below, the anticipated negative moves SPX and DIA are playing out as expected; the loss of both the Central Weekly Levels and Central Monthly Levels validates that bearish momentum remains firmly in control, as the bullish structure continues in play for AMD, META, TSLA, SPCX, and the ones highlighted.

• Spotting Divergences and Velocity: Conversely, other securities move with greater velocity or in the opposite direction. For instance, I anticipated VXX to act as a bullish security this week. As seen below, it has rallied 6.5% so far. It is close to reclaiming its Central Monthly Level, which could flip structural momentum and signal higher risk for the wider stock market if recovered.

• Managing Invalidations and Reversals: XOM is the best case for this week, the bearish reversal has been postponed and the structure is getting bullish, the fact that the stock is significantly above both its CWL and CML suggest caution before shorting it blindly.

• Instant Risk Assessment: Having indices, mega-caps, ETFs, and multi-sector stocks organized in one dashboard lets you instantly spot which assets have lost structural momentum for traders and long-term investors through the loss of their Central Monthly Levels, while simultaneously tracking shorter term behavior relative to their Central Weekly Levels.

The dashboard is here:

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Last Saturday, I posted the strongest setups on our watchlist, and the analysis continues to prove its worth by delivering solid results. My bearish setups for SPX and DIA continue to play out, with weekly declines of -1.1% 🎯 and -1.8% 🎯 respectively. Remember: staying bearish on the indices does not mean there are no bullish setups in the market. The bullish opportunities highlighted last Saturday for META, AMD, and VXX continue gaining traction with weekly gains of +6% 🎯, +9% 🎯, and +3% 🎯 so far.

Yesterday, I started a series of educational guides on how to navigate these setups. We studied how the Setups Blueprint posted every weekend works regarding the information it contains, such as price targets based on modeled levels where institutional algorithms react, invalidation levels, risk-to-reward ratios, and criteria for setting stop losses. In case you missed it, the publication is here:

Today, we will continue this series for managing high-probability setups by covering entry points, actions to take when a target is reached, how to read price action, and trailing stops.

When you subscribe to the paid plan, you unlock all the content at SmartReversals.com, including the setups blueprint and the support and resistance levels for the week in play, all the market intelligence and educational library that includes special technical studies and fundamental analyses. The Market Intelligence has my two ebooks on Technical Analysis available for paid subscribers.

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Today’s Agenda

• Managing High-Probability Setups: AMD, META, SPX, DIA, SPCX, AVGO and more.

• Watchlist Tracker

• Daily plan for SPX and ES=F with Combined Levels

The watchlist tracker is a new feature that helps map price action for every ticker in our watchlist effectively, looping when a ticker is overperforming or underperforming during the week. The tracker includes key individual levels.

Let’s begin.

Managing High Probability Setups - AMD Case Study:

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In last Saturday's Weekly Compass, I anticipated a high probability of a bearish reversal in the SPX and a decline in the Dow Jones ETF (DIA), alongside bullish moves for SPCX, AVGO, and AMD, plus a spike in VXX. Today, those setups played out as expected: SPX (-0.58%), DIA (-1.1% reaching $528 🎯), SPCX (+3.7% to $154.1 🎯), AVGO (+2.9% touching 372.9 🎯), AMD (+5.9% crossing $503 as bullish target 🎯), and VXX (+1.5% 🎯).

The market is highly dynamic, being bearish on the SPX doesn’t mean that every single ticker in the stock market will fall, every ticker follows its own setup, providing both bullish and bearish opportunities, and that neutrality is what I analyze having a watchlist with indices, futures, megacaps, and high volume ETFs that cover different sectors. Today, we will review the Setups Blueprint that is published each Saturday and do a recap on how to best utilize it, including the price levels modeled in advance every Friday for the week ahead, and used to set targets, as the ones mentioned above.

It’s just Monday and five of the high probability setups are playing out reaching weekly targets, the Weekly Compass is here:

When you subscribe to the paid plan, you unlock all the content at SmartReversals.com, including the setups blueprint and the support and resistance levels for the week in play, all the market intelligence and educational library that includes special technical studies and fundamental analyses. The Market Intelligence has my two ebooks on Technical Analysis available for paid subscribers.

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Today’s Agenda:

• How to use the Setups Blueprint

• Tracking our Watchlist

• Daily SPX and ES=F Levels for tomorrow

Let’s begin.

Setups Blueprint: All the regular watchlist in one dashboard with price targets and invalidation levels

The Weekly Compass provide the technical context for the SPX and the market in general by analyzing breadth, volatility, momentum indicators and reversal risks. Within that core publication, there is a section named the Setups Blueprint, where you can find the condition for each ticker (bullish or bearish), price targets, invalidation levels, and the risk/reward ratio.

Here is the Setups Blueprint for this week, where the decline in the SPX🎯 and DIA🎯 was anticipated, along with the bullish moves for AVGO🎯, SPCX🎯, AMD🎯, and VXX🎯:

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Afterward, we will discuss NVIDIA’s earnings and the preliminary market reaction, followed by a general market update. Unlock this content by upgrading to the paid plan.

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What You Get as a Paid Subscriber

When you upgrade to the paid plan, you unlock three core publications each week, along with exclusive member benefits:

→ Wednesday: Market Intelligence and fundamental analyses (today’s content).

→ Friday: Support and Resistance Levels for the week ahead.

→ Saturday: The Weekly Compass, featuring an in-depth technical immersion.

In addition to our weekly publishing schedule, your membership includes three immediate advantages:

→ Instant Ebook Access: Download my two foundational technical analysis ebooks directly from the Market Intelligence Library. (click here)

→ Daily SPX & ES=F Levels: Receive daily levels assessing short-term momentum and potential reversal signals.

→ Customized Level Modeling: Every Sunday, submit your watchlist stocks in the paid subscriber chat. Their specific institutional levels are modeled for the week ahead and published directly to the site.

All content is available at SmartReversals.com.

Let’s begin.

The Four-Phase Market Cycle Framework

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Gold doesn’t behave like a stock or a bond. There are no earnings to model, no dividends to discount, and no CEO to blame when the price drops. What gold reflects, more than anything else, is the collective confidence people have in the institutions managing money. When that confidence is high, gold is ignored. When it starts to crack, gold gets attention fast.

Silver follows the same logic but adds a wrinkle: it has a real industrial life. Solar panels, electronics, electric vehicles, medical equipment. That dual identity makes silver louder, more volatile, and more interesting to trade, but also harder to hold when the industrial cycle turns against it.

Today’s Agenda

• Today I will cover Gold and Silver, the historical events and what to expect considering key drivers, Fed, inflation, oil, bonds, and to special situations that produce the biggest moves.

• We will also review the status of the high-probability setups posted over the weekend including the charts for SPX, DIA, NFLX, TSLA, SMH, GLD. And other securities that are worth watching given their technical conditions like GOOG, MSFT, BITCOIN, and of course, GLD.

• Daily Plan for the SPX and ES=F for August 20th. Last night I anticipated a gap fill attempt today, with 7,729 acting as a significant resistance, which is the rejection zone of the day. Daily levels for Semiconductor giants included.

This week, the SPX reversed as expected below 7,730, dropping close to the extended target of 7,673 🎯. DIA, the Dow Jones ETF, also fell as anticipated, touching its extended target of 532 🎯. NFLX reached its bullish target of 80 🎯, and TSLA is aiming for its bullish target despite elevated volatility. Meanwhile, SMH hit the anticipated bullish target of 600 🎯 before pulling back to 556, another pre-modeled level.

These price targets were modeled in advance last Friday for this week, demonstrating how institutional algorithms react at these key price zones modeled in advance 🎯.

When you subscribe to the paid plan, you receive the following perks:

• Daily levels for the SPX and ES=F

• Full access to our market intelligence library

• Downloadable copies of my two e-books on technical analysis (basic and advanced)

• Custom modeling of support and resistance levels for your watchlist, simply submit it every Saturday in the chat and receive your levels on Sunday.

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On July 29th, I outlined the technical reasons why gold was likely to bounce. GLD, the ETF we track, is up 11% since that post, proving how technical analysis helps investors and traders improve performance.

Today’s publication is a must read for every investor and trader, it includes historical charts and comprehensive context that will allow you to navigate rallies and manage risk.

Let’s begin with the market intelligence, then we continue with the analysis of setups.

Gold and Silver: The Complete Framework

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Over the last few days, we have seen very rapid moves in extended hours (after or before the market opens) following earnings reports on both the bullish and bearish sides, not to mention pre-market shifts driven by developments in the conflict in Iran. Regardless of whether the situation is bullish or bearish, sharp reversals are occurring. Today, this publication focuses on educational content about how to combine support and resistance levels with other technical indicators.

The key question when using levels is: How to anticipate whether a level will act as a reversal zone?

Last Friday, the support and resistance levels for this week included educational content on setting a hierarchy of monthly, weekly, and daily levels, along with preliminary considerations for combining them. Today, I have updated charts illustrating reversals that occurred right at the market open, reversing extreme moves.

The S/R Levels mentioned above for this week are here:

When NFLX posted its earnings, I anticipated that chasing that bearish move with shorts was extremely risky and that a (bullish) reversal could happen. I indicated my preferred timeframe to anticipate this kind of move following extreme premarket overextensions, and the reversal played out as expected with the stock jumping at the open from 65 to 69 for a +6% move 🎯. The same thing happened with GOOG and META, both bouncing following the post-earnings reports selloffs. Technical analysis anticipated that chasing those moves after earnings were highly risky as documented. Today, we are going to study those patterns, alongside reversals to the downside, which is what we have seen with AMZN with a cumulated -5% move since my bearish warning on Monday 🎯.

Today’s edition focuses on educational content on reversal zones because support and resistance levels are areas where institutional algorithms react. We saw this in action this week, for example, with the S&P 500 facing rejection at 7,761 (a pre-modeled weekly level) and the QQQ facing rejection at 726.2 (a monthly level updated last Friday). Similarly, once GOOG reached its bullish target of 381 in confluence with the monthly target of 382, that zone printed a reversal area that triggered the bearish engulfing candle we saw today. It is interesting to observe with these three tickers how accurately support and resistance levels mark the zones where institutional algorithms react. Now let’s study when the levels are likely to become reversal zones, and when they can flip from resistance to support or vice-versa.

Remember that when you become a paid subscriber, you unlock my two ebooks on technical analysis, they can be found in my educational library:

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Today’s Agenda:

• Combining S/R levels with Bollinger Bands: Case studies on NFLX, META, and TSLA.

• Daily SPX Plan and Levels for Thursday, August 6th. Technical chart.

• Technical Analysis for QQQ, GLD, SMH, AVGO, and NVDA, alongside commentary on GOOG, AAPL, and other megacaps.

• Daily Levels for Tomorrow: SPX, SMH, NVDA, PLTR, SPCX, AVGO, LLY, AMD, MU, TSM, SHOP, MELI, UBER, and APP.

Let’s begin,

Anticipating Reversals: How to Avoid Getting Squeezed

The recent cases for NFLX, META, and TSLA provide good vivid examples:

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U.S. stocks closed sharply lower, suffering a steep broad-market sell-off catalyzed by a combination of hawkish Federal Reserve division, mounting inflation fears, and geopolitical escalation. The Federal Reserve voted 9–3 to maintain benchmark interest rates steady at 3.5% to 3.75%, marking an ongoing pause . However, the decision rattled investors as three regional Fed presidents dissented in favor of an immediate quarter-point rate hike due to sticky inflation. This divided stance, coupled with Warsh’s commentary highlighting persistent price pressures, triggered a strong sell-off as the price of the SPX reversed from 7,452, our key central monthly level that has defined momentum and volatility over recent days.

Compounding these domestic concerns, geopolitical tensions spiked following an unexpected attack on U.S. forces in the Middle East, moving oil CL=F +7%, and intensifying worries over rising energy-driven inflation. Let’s see if the high probability setup posted for XOM during the weekend reaches its bullish target.

On a shorter-term basis, the market lost the 7,421 central daily level at the open and slid to 7,352, our second bearish layer, by noon. Prices found a temporary bounce and gained traction when the widely anticipated interest rate pause was announced, but reversed sharply once the Fed Chair began his commentary. During rate decisions, the Fed Chair’s remarks are just as critical as the policy choice itself. As longer-term bond yields surged, the recovery vanished, pushing the SPX down to test the 7,321 daily bearish level shared yesterday.

Tech presented oversold conditions that opened up the probabilities for a bounce, for that reason I shared last night daily levels for QQQ and SMH today, but 674 and 527 respectively were not conquered, and both ETFs closed at the lowest daily levels shared last night: 662 for QQQ, and 502 for SMH. See how the three tickers closed at their lowest daily level in synchrony, another reference of why institutional algorithms react to these modeled levels ahead of each session.

With the potential bounce unconfirmed by the recovery of key levels for the SPX and QQQ, we continue studying the likely sell-off destination outlined over the weekend. Let’s begin our mid-week market update by examining the SPX, QQQ, SMH, and GLD, alongside current setups for META, MSFT, AAPL, AMZN, AMD, and GOOG now that its post-earnings gap has been filled as expected.

I highlighted four elements over the weekend that were likely to pressure the stock market. So far, geopolitical tensions and the Fed’s hawkish tone are playing out. On the tech earnings front, MSFT’s preliminary move of +8% is offsetting META’s bearish reaction of -7%.

Will Gold reappear as a safe-haven asset? I will be doing a deep dive into gold, covering both its technical setup and the macro aspects you need to consider.

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Let’s begin.

SPX - The bearish target outlined during the weekend continues in play:

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There is a divergence forming in the market that deserves serious attention, and it is not showing up in the headline index number. The SPX is holding near its highs, my anticipated annual target of 7,638 set the expected rejection in June with the all time highs at 7,620 (and posted that day that the target could be considered reached), price is compressing with a series of lower highs and higher lows. On the surface, everything looks constructive. But when I look beneath the index, at the groups that built this rally and carried it for two and a half years, the picture is more complex.

The Magnificent Seven, AAPL, MSFT, NVDA, AMZN, GOOG, META, and TSLA, combined carry somewhere between $16 and $18 trillion in market capitalization. That is approximately 30 to 33% of the entire SPX. When this group moves, the index moves. When this group stalls, the index borrows time. 2026 has not been the best year for some of these giants, MSFT, TSLA, and META have performed -18%, -17%, and -5% respectively before today’s earnings reports (as we have navigated after hours moves, the final verdict comes during market hours tomorrow), NVDA, AMZN, and GOOG have performed +14%, +6% and +9% with significant volatility. AAPL is the only outstanding considering the bullish year with +20% gains in 2026. (NVDA at +14% versus +62% average in semiconductors as sector average is quite modest).

Then there is the semiconductor complex. TSMC, ASML, AMD, AVGO, MU, QCOM, AMAT, Lam Research, and others, carry an aggregate market capitalization in the range of $8 to $9 trillion, heavily skewed by NVDA also in this group. The combined weight of the semiconductor complex and the Magnificent Seven represents a concentration of market influence that has never existed before in this form, and both groups are now underperforming the market they are supposed to be driving.

The fundamental question I keep coming back to is what exactly is sustaining the SPX at these levels if the two groups responsible for the majority of its gains are not participating with conviction. The answer, at least partially, lies in the AI capex narrative. Microsoft, Google, Amazon, and Meta are collectively committing hundreds of billions annually to GPU-dense data center infrastructure. That spending flows to NVDA first, then cascades through the supply chain. The entire semiconductor thesis for this cycle rests on that spending continuing, accelerating, and eventually generating returns large enough to justify the valuations embedded in both groups. The market is beginning to ask whether those returns will materialize on the timeline that current prices assume.

The earnings quality difference between these two groups also matters here. The Magnificent Seven generate revenue from advertising, cloud subscriptions, consumer hardware, enterprise software, and logistics. These are diversified, recurring, and relatively predictable streams. The semiconductor complex, by contrast, is increasingly dependent on a single demand driver. That asymmetry means the Magnificent Seven can potentially hold their valuations longer on the strength of their own fundamentals even if semiconductor sentiment weakens. But the index cannot absorb a simultaneous drawdown in both groups through rotation alone. No other sector is large enough or growing fast enough to replace $25 trillion in combined market influence if confidence in AI monetization erodes.

What the Rest of the Market Is Saying

The sector picture adds important context to this divergence. Financials are trending constructively as we also see every week with JPM, and V. On the surface this looks like a positive signal, and in isolation it is. Banks benefit from elevated rates, healthy credit spreads, and continued economic activity. Financials carry roughly 13% of the SPX, and their strength signals that credit markets are functioning and corporate borrowing remains viable. But financial leadership in the absence of tech confirmation as a transitional signal rather than a durable one. Late in cycles, money often rotates into financials precisely because it is leaving growth. If the economy softens from here, credit quality deteriorates quickly and financials tends to roll over just as fast as it rose.

Consumer discretionary, is heavily weighted toward Amazon and Tesla, making it a hybrid between consumer behavior and tech sentiment. Its stalling price action says the consumer is becoming more selective and that institutional money is not allocating to discretionary with confidence. When the consumer hesitates, revenue growth across the index eventually follows.

Healthcare is the signal I find most telling. It is non-cyclical. People need medical care regardless of economic conditions, and the sector benefits from demographics, GLP-1 drug demand, and ongoing biotech innovation. When institutional money rotates into healthcare at index highs, it is not expressing optimism. It is hedging. Portfolio managers are reducing risk while maintaining equity exposure, and they are doing it quietly through a defensive sector that does not announce itself the way a dramatic selloff would.

The combination of these signals, tech divergence, semiconductor and Mags 7 underperformance, financial leadership that may be transitional, discretionary stalling, and defensive healthcare accumulation, tells a coherent story. The market is not broken, but it is rotating in a way that historically precedes either a reset in leadership or a broader correction that brings the index in line with where its most important components already trade.

July has been weak so far as technical conditions anticipated, there is one week and a half ahead with major earnings reports, let’s study the charts and setups for the companies we track that are posting earnings this week (GOOG, TSLA, INTC, NOW), their implied moves, and price levels where overextensions could reverse rapidly, as warned last week ahead of NFLX earnings, when an intra-day reversal was anticipated in the bearish scenario (the stock recovered over 5% of their losses during market hours, chasing euphorias is risky but with technical indicators we can anticipate when the price goes too far too fast.

Charts for SPX, SPCX, GLD, are also here, daily levels for tomorrow for all the securities mentioned and MU are here, so you can plan ahead your moves.

Be careful chasing the selloffs for GOOG and TSLA, last week I anticipated how to manage NFLX if it cratered. The daily levels proved to be essential to trail the move.

Next week I will track in the same way the giants posting earnings. Upgrade your subscription and et access to this valuable information.

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Let’s begin with the SPX and expectations considering the context mentioned above.

SPX: Divergences and Expectations

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In the Weekly Compass posted on Saturday, I highlighted a distinct peculiarity: the exceptionally high volume observed on Friday for the Magnificent 7. This volume was so massive that, despite the lack of a solid, bullish setup at the time, it stood out as an odd anomaly. High volume was a key signal since most of the Magnificent 7 names were oversold on the daily timeframe. Consequently, the current spike was a distinct possibility and as usual I provided specific price levels that the price should recover to validate the bullish reversal and specific targets in the Setups Blueprint. For example: if TSLA recovered $387.9, a move to $407.1 was possible, the stock closed today at 425 for a +12% weekly rally so far; for META “the probabilities for a bounce are considerable” was the note on Saturday, $555 was the trigger to turn bullish, the stock exceeded the last weekly target of $606 today with a cumulated weekly move of +11%.

As mention to subscribers, I highlight some setups, but every Saturday the setups blueprint studies over 30 setups covering all the mag 7, key ETFs like SPY, QQQ, DIA, IWM, SMH, GLD, SLV, megacaps like AVGO, AMD, and now SpaceX (SPCX) as well. Unlock that valuable information using clear triggers and targets, zero gut-feeling, and setups explained transparently by subscribing to the paid plan.

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The semiconductor weakness anticipated last week in the Weekly Compass is in play while the Magnificent 7 are bouncing. As promised, today we will analyze each of the Magnificent 7 stocks individually, utilizing our levels to closely monitor their price action.

Seasonality vs. Reality: The July Data

Next, let’s address a very popular topic right now: July seasonality. Social media is flooded with statistics pointing to a guaranteed bullish July. Over the last 10 years, July has indeed been consistently bullish, even during broader bear market years.

I have brought some charts that break down the percentage of positive months over a broader 20 year range. On that timeframe, July ranks as one of the most bullish months of the year, finishing positive 79% of the time.

However, if you zoom out further and analyze a different historical period, such as 1990 to 2006, the statistics completely invert, making July one of the most bearish periods of the year.

As I always emphasize to premium subscribers: always do your own charting and never blindly trust the beautiful tables posted on social media. When you see historical results boasting a 90% or 100% win rate (my minimum threshold), then check the sample size. Is that percentage reflective of all market cycles, or is it just a cherry-picked portion of data? That is exactly the case with current seasonality metrics.

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The ultimate solution to navigating this is relying on our Central Monthly Level and weekly levels to assess short-term momentum, backed by chart analysis. On Saturday, we identified that semiconductors were cracking. Even on the night Micron posted its earnings report, we anticipated the resistance zone. The subsequent price action confirmed the moves from the specific coordinates provided to our premium members.

You can read the Weekly Compass and all the articles on SmartReversals.com.

Today, in addition to the Magnificent Seven, I will cover the setups anticipated last week, starting with the SPX. The technical analysis presented to subscribers anticipated a bounce targeting 7,491.3. which represents the core consolidation zone where price has spent the last day and a half 🎯. The condition for this setup was a clean recovery of the Central Weekly Level at 7,392. On Monday, price reclaimed that level, triggering a clean bullish setup during market hours with no subsequent breaches of the Central Weekly Level.

MSFT, a stock that displayed a solid, bullish setup validated by high volume. The expectation was a bounce of at least 3.4% to 388.4, which has served as the high of the week 🎯.

PLTR was also highlighted as a reversal. Recovering $116 was the trigger, it was expected to reach 125.7 for an 11.3% bounce from Friday’s close. That target was met 🎯, and price is currently consolidating at that level.

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Over the weekend, the Weekly Compass anticipated a bearish reversal for the market. This anticipation came despite the rally the market printed on Friday because, as mentioned then, many elements remained bearish beneath the surface.

The Setups Blueprint highlighted strong probabilities for a bearish reversal in the SPX, targeting 7,409 for a 1.2% drop. The actual low for the week reached 7,336.8, representing a 2% decline from Friday’s close 🎯.

Another high-probability setup was a bearish reversal for SMH. I indicated that 646.6 would be breached, triggering a confirmed target of 629.3 for a 4.6% decline. The actual low hit 607 🎯 for an 8% drop, closely approaching our bearish extension target.

The next anticipated setup was a bearish reversal for AMD, targeting 510 for a 5% decline. That level has acted as the exact support zone for AMD over the last two days 🎯.

For Gold (GLD), the Weekly Compass suggested a bearish continuation toward 375.1 for a 3.1% drop. The current move reached our third bearish target at 364.7, logging a 5.8% decline 🎯.

Another bearish move highlighted was for MSFT, pointing toward 367.9 for a 3% selloff. The actual low for the week hit 364.7 🎯, extending beyond our initial target.

In summary, MSFT, GLD, AMD, SMH, and the SPX represented five high-probability setups that reached their targets cleanly with an average gain over 3%.

The strength in finance has kept JPM and DIA afloat, that setup is invalidated as of now, XOM on the other hand remains weak despite oversold conditions. The average risk reference for those averaged 0.6%. Every setup posted here comes with an invalidation level so investors have complete information to make informed decisions and protect their capital.

The Weekly Compass highlighted bearish conditions and the setups I handpicked, but subscribers who follow PLTR, META, SLV, NFLX, or IBIT, they had the bearish roadmap in the executive blueprint posted on Saturday. A bearish move was likely.

This brings us to the midweek update. Let’s move to the technical charts below with price target updates, upgrade your subscription for this institutional approach with transparent technical indicators and clear price targets.

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For the SPX, we have been tracking the daily levels to anticipate upcoming moves. As anticipated for paid subscribers last night, today’s rally vanished after finding rejection near 7,409.5, a resistance clearly identified yesterday as a confluence zone where any upside would be tested 🎯.

Today, we will assess broader market conditions and the index’s current stance, especially considering the crucial support zone where it closed. We will also examine key charts for IWM, QQQ, AAPL, AMZN, NVDA, AMD, and GLD, also providing context for the other assets on our watchlist; we will map out the key resistance zones for our entire watchlist if the bounce following the MU earnings report persists. Just as I highlighted overhead resistance last night, for the SPX but today is for all our ETFs, all Magnificent Seven, Crypto and the other megacaps.

Let’s begin.

SPX - The Line in the Sand

The purple trendline was tested again today for the fifth time in June. As technical principles dictate, the more a level is tested, the higher the probability of it being breached. Here is how to analyze tomorrow's potential bounce and exactly what is needed to validate true bullish momentum rather than just another faded rally:

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U.S. equities sold off hard on Wednesday as markets digested the Fed’s latest policy decision. The central bank held rates steady at 3.50% to 3.75%, but the forecast is what moved markets. Under new Chair Kevin Warsh, the FOMC projected a year-end fed funds rate of 3.8%, a 25 basis point hike from current levels.

Warsh delivered a shorter policy statement, stripped out the usual forward guidance, and committed to a single mandate: price stability. No hints, no roadmap for the path ahead.

The market’s reaction was immediate. The S&P 500 dropped 1.2% to 7,420.1, the worst reaction to a new Fed chair’s first decision day since 1994. The Nasdaq fell 1.3% to 26,021.7. The Dow surrendered an early record high to close down 1.0% at 51,492.6. The Russell 2000 held up better than the majors, down 0.7% to 2,918.0.

Remember my study about changes in FED Chairs posted last month, everything is aligning. The special studies posted in the Market Intelligence Hub (access here) are a essential tools for long-term investors and traders.

Also the current consolidation is consistent with rare bullish price action observed in April; the study is here:

Bonds moved fast and hard. The 2-year yield jumped 17 basis points to 4.2%, the 10-year added 7 basis points to 4.4%, and the dollar gained ground against major currencies on the back of the repricing.

Geopolitics pulled oil in the opposite direction. President Trump signaled a U.S.-Iran peace deal is close, one that would reopen the Strait of Hormuz to shipping. WTI crude has dropped to a three-month low at $75 per barrel, right at its 200 daily moving average. GLD reversed after reaching our bullish target of 400.7 with precision 🎯, and Bitcoin reversed from the annual zone of $65,9K.

Rate-sensitive names absorbed the brunt of the selling. SpaceX fell 5.0% after reversing from the anticipated resistance of 225; last night I highlighted to subscribers the bearish conditions for SPCX and the implications of being below 207.5, with the bearish target of 189, which acted today as the precise support 🎯.

High probability Setups

9 of the 10 setups posted in the Weekly Compass were correct, 7 reached 🎯 their targets, 2 are ✅ on their way, just one was ● invalidated. 90% directional accuracy, 70% target accuracy, and it’s just Wednesday. Don’t think twice and subscribe.

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JPM: Bullish, targeting 329 (+3%), the 337 (+5.2%) extension included in the S/R levels was reached today 🎯.

GLD: Bullish, targeting 400.7 (+3.7%). The top of the week was 402.4 🎯.

LLY: Bearish setup anticipated, targeting 1,115 (-2%); the close today was at 1,112 🎯.

GOOG: Bullish expectations targeting 370 (+3.5%), the high of the week was 373 🎯.

WMT: Bullish, targeting 122.7. (+1.4%) The top was 122.9 🎯.

AMZN: Expected to reverse and reach 248 (+4%), it happened on Monday and Tuesday 🎯.

META: The bounce was anticipated and set to 590 (+4.2%), target was exceeded 🎯.

AAPL: Bearish setup, price action is weak, aiming at the target for the week ✅ .

IWM: Expected to breach 288.8, move is in progress ✅.

MSFT: The only one invalidated, the bounce didn’t hold above 396.7, once it was lost capital was protected thanks to that reference ●.

The Support and Resistance Levels posted here are modeled ahead of price action, and they have proven to anticipate zones where the algorithms react. It’s simple, you subscribe, see the levels, the direction suggested by indicators charted, and then follow with price action. Upgrade now:

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Today’s Agenda

Weeks of FED meetings are like weeks when major companies post results, today I’ll present how to manage levels for high probability setups in order to lock gains when they are reached.

• SPX, VIX, Breadth and Sectors Update

• Magnificent Seven Assessment

• How to Navigate a High Probability Setup

• Daily Levels for SPX, SPCX, and Magnificent Seven

• Non-Tech Setups to Watch

Let’s begin.

SPX - Gap Filled - Technical Levels to Watch

Following Monday’s rally, I warned caution due to the open gap at 7,456. On Tuesday, losing the central daily level of 7,549 served as an early warning sign that targeted 7,521, a level reached by yesterday’s close. Last night, I noted the index’s underlying weakness and the bearish conditions below 7,528. The index attempted to reclaim that level until 10:45 AM today, after which the selling pressure resumed.

Looking ahead to tomorrow, the rest of the week, and the broader month, here is the current setup. A crucial monthly level was lost today, and the VIX is showing signs of a bounce, as illustrated in the chart below:

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The World Cup may kick off tomorrow, but the stock market has its own main annual event this Friday. On June 12, 2026, SpaceX goes public on the Nasdaq under the ticker SPCX, and it is set to be the largest IPO in financial history.

The numbers are built for headlines: a valuation near $1.77 trillion, a share price of $135, and a rare 30% allocation reserved for retail investors. For once, Retail Traders get a seat at the table from day one.

In a typical IPO, almost all the shares at the offering price go to large institutions and favored clients of the underwriting banks. Regular investors usually cannot buy until the stock opens for public trading, which is often well above the IPO price. This lets ordinary investors buy in at the same $135 price the institutions pay, rather than chasing the open.

There is a lot of speculation about the company valuation. Today we study the last ten major IPOs, from META and BABA to TSLA and PLTR, and the pattern is hard to ignore: every buyer can expect one single element: Volatility, every one of them handed early buyers a steep drawdown before the real trend began (sometimes following a rally, sometimes immediately), the first 6 months are likely to be a roller coaster, the details with clear charts and technical indicators are below.

Every investor must be aware that stocks like TSLA and SNOW saw double digit moves in both directions during the very first week of the IPO (probably one reason to launch SPCX on Friday.

One particular aspect in IPOs is the lack of technical indicators, moving averages, oscillators, Bollinger bands, and many others are built on recent historical data, the good news for subscribers is that we will have Support and Resistance Levels since next week, with daily updates.

Upgrade before Friday and be technically informed ahead of SpaceX debut with a roadmap, not a guess. Levels will be able to paid subscribers as well.

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Let’s begin.

META, BABA, and TSLA: All Synchronized

These three are particularly relevant, the first two given their size, TSLA given the Elon Musk effect; notice the arrows in each chart and the zig-zags with double-digit moves over time. When technical indicators are applied, the navigation makes perfect sense. Same for UBER, SPOT, and the others below, PLTR, SPOT, and TWLO are the ones with differences in the initial weeks only:

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The stock market moves in distinct, repeating cycles. While some seasonal patterns are minor enough to cause “analysis paralysis” among market commentators, the U.S. presidential cycle is a statistically significant pattern. Historically, the midterm election year is a turbulent or outright bearish period for equities.

Today, we will analyze these historical midterm patterns using clean technical charts rather than relying on standard statistics tables without technical indicators that help to assess the current conditions with the ones that preceded corrections in midterm years. By looking directly at price action, we can objectively evaluate the probabilities for the current midterm year of 2026.

Following the special macro analysis, we’ll dive into the performance of the high-probability setups highlighted in this week’s Weekly Compass.

Momentum hit several major milestones, with LLY 🎯, COST 🎯, and MSFT 🎯 hitting their bullish targets, while JPM 🎯, IWM 🎯 and AVGO 🎯 completed their moves straight to their bearish objectives. META ⚠️ breached its defense floor for short term bullish considerations. 6 right setups, 1 touching the stop loss reference, always provided with the setups to protect capital.

Unlock today's Special Study for the S&P 500, the Stock Market Update, and the complete Market Intelligence Library. Every study posted in our hub is a must-read for serious long-term investors and tactical traders alike.

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Market Intelligence Library

Below, we analyze the stock market and the setups for DIA and SPY, both neared by less than a dollar 👍.

Let’s begin,

Trading the Midterm Year - What to Expect From the SPX:

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The stock market continues moving in euphoric mode, and the question now is: what is coming next? Today, 7,460 was reached by the SPX, very close to a level I anticipated since November 2025. We are going to study what to expect from the market moving forward, considering the current overbought conditions and the recent price action.

Regarding our high-probability trades posted last Saturday, a bullish move was anticipated for Tesla, targeting 445 for a 3.5% move 🎯. That target was reached and surpassed today. Now, monitoring price action using daily levels is worth considering, as the stock is showing some overextended conditions.

Another bullish setup anticipated was Apple, targeting 300 🎯. That level was the high of the day today, completing a 2.4% move for the week. For Visa, there was an expectation for a bullish reversal upon recovering 321. It reached the bullish target of 327 for a 2.6% move yesterday before the price reversed 🎯. This reversal is why I highlight caution with Apple and Tesla, considering overbought conditions in the broader market.

In Saturday’s Setups Blueprint, there were bearish considerations for JPMorgan. JPM reached our bearish target of 296 🎯 for a 1.9% move yesterday before spiking; anyway, the Central Weekly Level rejected the price again yesterday, leading to bearish price action today.

Risk management is key in these high-probability setups, as seen this week with Eli Lilly (LLY). I anticipated potential “red” before a bullish continuation, but that continuation happened sooner than expected. Any potential short position based on the bearish setup found its risk management trigger at 964 ⚠️, the Central Weekly Level that invalidated the bearish bias. The price has since flipped the setup and reached 1,013 as an extended bullish target.

This week, there was also an expectation for IBIT reaching 48.5 for a 6.8% move. That level was reached 🎯 , and IBIT is now mirroring Bitcoin by printing a healthy consolidation after the run we anticipated in the Weekly Compass. Another bearish setup highlighted was XOM, but like Lilly, it bounced sooner than expected ⚠️. It recovered the Central Weekly Level of 147.9, triggering capital protection, and is now showing indecision at the weekly bullish layer of 151.9.

Other setups to watch were also posted, such as Costco. The bullish target for COST was 1,025.5 (a 1.7% move), but it has since been extended to 1,042.1 for a total move of 3.3%. Paid subscribers know how important it is to monitor the surpass of a specific annual level we have watched for weeks.

Upgrade your subscription to the paid plan and unlock the Weekly Compass with the Setups Blueprint every week, including price targets and risk management levels:

Setups for other securities, including Amazon, Nvidia, Broadcom, the rest of the Magnificent Seven, and major indices like QQQ, SPY, DIA, SMH, and VXX, are posted every Saturday. Subscribe to get access to these studies, and do not miss today’s special content regarding what to expect after reaching the major bullish targets we have anticipated since November.

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Let’s begin with today’s special study.

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A new Federal Reserve Chair is expected to take office this month. The transition has introduced significant uncertainty into the market, particularly given the strength of the current rally. In my March 28th publication, I anticipated a high probability for a bounce; because the SPX has maintained its Central Weekly Level (CWL) since then, we have successfully navigated this +16% bullish move with technical discipline and specialized studies.

Today, we will explore the historical performance of the market during Fed Chair nominations, utilizing our preferred timeframes and technical indicators. This follows the same structural approach I used to anticipate the 20-week moving average acting as support one month ago, why the 6,618 gap did not require immediate attention, and the bullish implications of the “Three Green Weekly Soldiers” last week.

All of these studies have proven valid. While technical charts do not repeat, technical patterns often do. This neutral, price-action-based approach has paid off significantly during this rally. Find all of these studies and my educational collection at the SmartReversals site:

Access the Market Intelligence Library

In today’s publication, we will analyze the potential for further moves under current overbought conditions. Our Wednesday editions are dedicated to market intelligence and historical patterns, with a track record of anticipating both bullish and bearish reversals. We will now examine what the charts suggest by comparing our current market structure to previous Fed Chair transitions. This analysis covers over 50 years of historical events, summarized in five key charts with actionable conclusions and our standard market update.

The Weekly Compass: Real-Time Results

Before we dive into the 50-year historical study, let’s look at how our high-probability setups from last Saturday’s Weekly Compass are performing. Of the nine setups identified, seven remain active in the expected direction:

• GOOGL: +3.1% (Bullish as expected)

• IBIT / Bitcoin: +3.9% / +4.2% (Bullish as expected since a month ago!)

• Silver (SLV): +2.7% (Bullish as expected)

• LLY: +2.5% (Bullish as expected)

• TSLA: +2.0% (Bullish as expected)

• BRK.B: Exceeded our bearish target of $478 before bouncing

Disciplined Invalidation: Part of high-probability trading is knowing when to exit. By adhering to our 141.7 level in PLTR and 325.4 in V, losses are mitigated and capital is protected as those specific setups shifted. MSFT Remains a hold for bullish continuation if the CWL is recovered. 9 Setups, 6 successful, 3 Invalidated. Only megacaps with high volume.

Stop trading on guesswork. Subscribe to receive these technical roadmaps and trade with a data-driven edge.

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Let’s begin with today’s special study. Wednesdays are dedicated to both long-term investors and strategic traders like you.

1979 - Paul Volcker SPX -7%

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The S&P 500 rallied for three consecutive weeks when it bounced, gaining over 3% each week. Such an occurrence is rare in the stock market; the move was so rapid that apathy is the common human reaction, similar to what is observed during a breadth thrust signal.

Today, the market is consolidating after this sharp move. Considering the high expectations seen across social media and mainstream news for a decline, I am providing a technical study of these types of events in order to have an objective perspective.

Premium subscribers who have followed my analysis over the past two years know that I do not blindly trust statistical tables. Instead, I study the charts and assess common patterns to reach a conclusion. This approach successfully anticipated several key moves: the 2024 pullback to the 40-week moving average in the midst of euphoria (triggered by the Japan carry trade in August); a major correction to $4,800 after touching $6,109 that I projected at the end of 2024 (which materialized in March and April 2025 after reaching $6,147); and the bullish continuation during the period of apathy in April and May 2025, which evolved into new all-time highs. Most recently, in March, during the recent correction, I posted a study of previous bull markets highlighting that a major top was unlikely to be in, based on a comprehensive analysis of historical pullbacks and corrections.

Another special study posted two weeks ago, focused on gaps and the likelihood of them being filled, the conclusions continue playing out:

Neutrality is essential when analyzing the markets. Today, I am analyzing the current price structure to provide a longer-term view that transcends the daily charts and their inherent volatility. Remember, while charts do not repeat themselves, technical patterns do. The best example of this is the consensus in March about April 2026 to produce an identical lower low to the one observed in April 2025, but it didn’t happen. Charts are never exactly the same, but technical conditions frequently repeat and our conditions are not the ones of 2025, we will study the right benchmarks today.

SmartReversals assesses near term price movements using the Support and Resistance levels and the Weekly Compass and published every Friday and Saturday. The Wednesday edition serves a different purpose, providing a broader perspective with market intelligence that covers macro structures and fundamental analysis to help you navigate the current environment.

Today’s analysis provides a factual outlook for price action for the S&P 500 (SPX) over the next 1, 3, 6, and 12 months. This is not based on gut feelings or sophisticated tables that you cannot audit. Instead, I rely strictly on real price action and verifiable charts.

Today’s edition is essential reading for both long term investors and active traders. Upgrade to a paid subscription now to gain immediate access.

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The stock market update is also included today, assessing the moves of META, GOOG, AMZN, and MSFT.

Let’s begin.

SPX Outlook: Is the Top In, or is This a Pause Before New Highs?

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Stage of the Market: SPX and NDX Price Targets

I share high-probability trades and technical analysis on Fridays, Saturdays, and Sundays including special levels for paid subscribers, and I also post on Wednesdays, focusing on fundamental analysis and special market intelligence assessments. These are my must-read publications for both long-term investors and traders.

For today, I am releasing a special publication analyzing gaps. What technical structure is present when a gap remains unfilled? There are over 19 gaps in the SPX since 1970 that have never been filled. Today, I am going to decode the similarities and differences between those historical gaps and the one we have right now.

High Probability Setups

Before continuing, my high probability setups are delivering and exceeding the expected results, last Saturday I anticipated the relevance of $6,816 for the SPX, and how likely would be for the bullish setups to perform if the index conquered that level.

The results are strong:

• First, NVIDIA (NVDA) had a bullish target of $194.5 for a 3.1% gain; currently, the weekly gain stands at 5.4%.

• I also indicated Apple (AAPL), which had a bullish setup with a target of $266 for a 2.3% gain; so far this week, the stock has gained 2.3%.

• Another high-probability note was for QQQ, highlighting $623.7 for a 2.1% gain and an extended target of $636.3 for a 4.1% gain. Right now, that weekly move accounts for 4.3%.

• I also highlighted the high likelihood of bullish reversals for Palantir (PLTR), Tesla (TSLA), and Visa (V). Palantir is currently rallying 11% this week, Tesla is up 12%, and Visa has rallied 3.8%. All three were identified as high-probability reversals.

• I posted bullish setups for JPM and LLY, their targets have not been reached, JPM remains above the key weekly level; if the central weekly level of $304 is lost, that will trigger a cut of the position (my daily levels help to anticipate these type of moves), in the case of LLY the reference for stop losses at $933 was breached, so capital was protected avoiding a further -3% move.

• Finally, Bitcoin is also looking constructive for the week; I presented the reasons for a bullish move, and so far, Bitcoin has gained 5.6% this week.

That’s 7 out of 9 securities moving as anticipated = 77% success rate.

Don’t hesitate, market conditions remain favorable, and while consolidations are likely, we will break down probabilities today. Upgrading your subscription is a no-brainer.

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Now, let’s begin this special study and market update.

SPX $6,618: Decoding the Rarity of the Unfilled Gap

Using the same approach that documented the December 2024 selloff toward $4,800, and the same logic I presented a month ago, highlighting that a major top was unlikely because pullbacks and corrections are normal, I will now detail the likely outcome for this gap and the projected course for the SPX.

Let’s begin.

SPX - Setups for Gaps Unfilled - What to Expect:

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It remains to be seen if the market will maintain the momentum from yesterday. Last night, I posted the Central Monthly Levels for April, which are the key levels where price switches from bullish (above) to bearish (below). Paid subscribers already recognize how precisely these monthly levels acted as resistance today not only for the SPX, and SPY, but for NDX, QQQ, META, NVDA, GLD, DIA, IWM, AVGO, BITCOIN, and many others as well… The stock market moves in a mathematic way, for that reason these modeled levels work so well.

Indecisive Price Action Once Again

Tracking a broad set of securities helps identify relative strength and rotations across different sectors and individual names. High-profile tickers like SMH, TSLA, AMD, GOOG, and AAPL are currently reclaiming key levels, suggesting that potential opportunities are forming. Our primary levels for managing risk are listed below.

We will study the essential level that must hold tomorrow as support to consider bullish continuation, or just to confirm if a gap fill is imminent if they are breached. The charts for Volatility, NVDA, and XOM as a key oil player are also posted in the market update.

Measuring Major Risks

As disciplined traders focused on risk-reward, we must revisit our risk scenarios. For this current move, as noted yesterday, there is a bearish monthly setup that must be considered to navigate April effectively. Today, we will analyze the market’s symmetric behavior during major tops. Based on patterns observed over the last 40 years, we will assess how the market behaves when a significant top is formed.

To put it simply, today’s publication provides the specific pattern used to measure the ultimate destination of a bear market. A bold statement? No, the charts will speak for themselves. This isn't gut feeling; it’s data used in December 2024 to anticipate the destination for a bear market in 2025, the bottom was $35 away from my $4,800 target.

Upgrade to unlock the analysis and the most likely scenario for 2026:

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We will assess the implications of the current structure, while reinforcing my thesis from last weekend regarding my worst case scenario.

Let’s begin.

This Pattern Matches 40 Years of Bear Market Bottoms, Including the 1987 Black Monday Crash

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As mentioned last Saturday: “We are monitoring for a potential “Dead Cat Bounce” or a full structural reversal. Given that the S&P 500 is at its final modeled support for the month (6,553), and the last two hours of Friday showed a reversal “print,” the technical setup for an early-week rally is in place”.

Yes, during times of war, uncertainty is significant and managing rapid moves becomes much more difficult. For that reason, with prudence and transparency that the market could affect setups, I highlighted in the setups Blueprint good chances for a bullish reversal in several stocks last Saturday. So far this week, they have rallied as follows: PLTR (+2.8%), JPM (+3.1%), AAPL (+1.9%), SMH (+3.7%), and AMD (+9.4%). I expected bearish continuation in AMZN and META, but AMZN is rallying +3.1% so far. XOM hit its bearish weekly target before reversing to continue its rally.

Today I will be focused on market conditions and in a guide about stop losses, since a couple of subscribers have asked me questions about it. I’m glad there are questions about it, it means that there is a strong interest on capital protection.

Stock Market Conditions

I’ll use today a narrative combining different indicators and charts for the SPX, then we will study stop losses and how to “trail” them using our Support and Resistance levels. Let’s begin:

Five Charts that Suggest a Bottom in Near for the S&P500:

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Powell said the Fed was not making as much progress on inflation as hoped. “The forecast is that we will be making progress on inflation, not as much as we had hoped, but some progress on inflation”

On oil and the Iran War: “Near-term measures of inflation expectations have risen in recent weeks, likely reflecting the substantial rise in oil prices caused by the supply disruptions in the Middle East. In the near term, higher energy prices will push up overall inflation, but it is too soon to know the scope and duration of the potential effects on the economy.”

That said, markets got the answer they feared most: not a hike, not a cut, but a Fed that is stuck.

There are tree forces are converging simultaneously, and each one makes the other harder to resolve.

• Oil. Currently consolidating around $96, this is not a demand-driven rally. It is a pure supply shock, the most difficult kind for a central bank to respond to.

• Inflation. The Fed revised its 2026 PCE inflation forecast upward to 2.7% from the prior 2.5% projection. The producer price index for February came in at 0.7%, surpassing the consensus of 0.3%. Inflation has now run above the Fed’s 2% target for five consecutive years. The window to “look through” another energy shock is closing.

• Growth. Nonfarm payrolls declined by 92,000 in February 2026 and the unemployment rate rose to 4.4%. The Fed’s own projections maintained a 4.4% unemployment rate forecast for year-end, but that assumes stability, not further deterioration.

These three factors create a dilemma that transcends the typical central bank toolkit. While the Federal Reserve can mitigate a banking crisis by flooded the system with liquidity, it cannot manufacture oil. Conversely, aggressive hikes to control inflation could trigger a total economic contraction. With the Strait of Hormuz facing severe disruption, the resulting supply chain shock is already inflating costs and stifling GDP growth

Today, we will examine two key topics: Stagflation and the Current Market Stage. We will compare historical market tops since 1970 with our current 2026 environment and identify the one missing element required for a "full recipe" to confirm that a bear market has begun.

Why that combination? The technical one is related to the current market environment, where inverse U turns in price have been the constant for seven of the last eight weeks for the SPX and the NDX. Two things mentioned in the Weekly Compass last Saturday are happening: 1) The potential Spike in the SPX given extreme oversold conditions (as we saw on Monday), and 2) the inverse U turn revisiting the lows (as it started yesterday and gained momentum today).

On Saturday, I posted the following outlook: SPX is bearish below $6,700.4. I also included specific volatility levels and additional technical indicators to monitor.

This morning, I shared a chart via chat and email suggesting a bearish reversal. This outlook is based on yesterday’s vanishing rally and current bearish conditions, with both the SPY and QQQ trading below their daily levels. Furthermore, the DIA had already broken below its central weekly level.

As noted last Saturday, this is a peculiar market that exhausts both bulls and bears with its rapid spikes and sharp selloffs. Given that the SPX and NDX both touched critical levels today, and a visit to their 200DMA looks imminent, we must assess the potential implications by comparing this price action to previous bear markets.

Upgrade to a paid subscription today to unlock our essential Wednesday analyses, designed for both long-term investors and active traders. This edition alone is worth the monthly subscription, as it provide clear, actionable references for where the market stands today.

Let’s begin.

Major Tops and Subsequent Bear Markets - 50 Years Study

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