Decline as Technicals Suggested: Gap-Fill in Play?
Navigating the Reversal: When Technical Levels Anticipate the Drop
The stock market declined today as technical conditions suggested and our levels validated. Last Saturday, the Weekly Compass presented a high-probability bearish reversal for the SPX, marking the loss of 7,773 as the key trigger that would validate the thesis, a level not far from Friday’s close, and in fact, a level breached during Monday morning in market hours with no gaps or premarket surprises.
Following yesterday’s decline in the SPX and NDX, I studied the semiconductor rally, highlighting the gaps on SMH, MU, and bearish setups for NVDA and TSM. As it has happened before, those gaps were filled rapidly during today’s session.
Levels as Confirmations
Given the bearish reversal risk described yesterday, I posted the daily levels for MU, NVDA, AMD, AVGO, TSM, and SMH, alongside our usual daily levels for SPX and ES=F.
When MU opened below the anticipated central daily level (CDL) of 1,014, the downside elevator was activated, sliding until the central weekly level of 933 acted as support. A similar move played out when NVDA lost its central daily level of 225 and AMD lost its CDL of 509, with these two stocks losing their crucial central weekly levels (details below).
Daily levels function as early warnings. In addition of losing the central daily levels, the anticipated daily supports at 992 (for MU) and 501 (for AMD) were lost as well. Using those levels to set protection for long positions help to protect capital, in this case against a -7% total daily selloff in MU and a -4.3% drop in AMD.
Similar case played out on the SPX. The anticipated central daily level published yesterday was 7,760, with the next line of defense at 7,729. Price action faced rejection near the 7,714 level at the open, leading to a choppy session that closed near 7,683.
The Edge of Anticipation
Technical analysis helps us anticipate direction, whether through momentum or reversals. Support and resistance levels modeled in advance, such as the central daily thresholds acting as strict above/below directional guides, provide a clear structural roadmap.
Because these daily levels are modeled one day ahead of the session, traders gain a key edge to plan their moves without the stress of the morning session. This daily analysis complements our three core weekly publications released on Wednesdays, Fridays, and Saturdays. Subscribe!
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Today, I cover the the daily plan for the SPX and ES=F including their daily levels for August 19th, also adding MU, AMD, NVDA, AVGO, TSM, SMH, and SPCX.
Tomorrow is FED day, the FOMC minutes will be released at 2PM New York time, volatility is likely, this week alone the VIX has jumped +11%, and the Dow Jones is filling its gap, as anticipated.
Daily Plan for August 19th
SPX, Futures, SPCX, and Semiconductors - daily levels: