Technical Indicators and Levels in Action
The tactical bounce was expected, now the SPX must hold levels - AAPL and AMZN moving as technicals suggested.
Last night in the mid-week update, I mentioned how likely a bounce was for today given oversold conditions in the SPX, QQQ, and SMH. I also noted how oversold AMZN was to guard against further declines, clarifying that technicals do not anticipate earnings reactions. In a neutral way, I highlighted that AAPL was overbought and outlined the technical reasons why a decline was likely. Both of those expectations played out today 🎯.
Following its earnings release, META began the decline with a gap-fill attempt as expected, MSFT continues to look constructive, and GLD showed technical signs of recovery, closing in the green today and building on the bullish thesis. On a separate note, TSLA was due for a strong bounce, which also materialized today.
All of those moves were anticipated through objective and transparent technical analysis presented to subscribers. Now let us talk about levels, because the bounce was strong and recovered essential lines modeled ahead of the session.
The central daily level for the SPX was 7,360, acting as support during the session. The price moved toward the next daily level of 7,406, consolidating until 12:45 before continuing its course to the central weekly and monthly levels, which served as a precise resistance zone. Specifically, the central monthly level at 7,452 acted as the exact resistance zone for the high of the day, while the central weekly level of 7,437 marked the precise close of the session. Because those levels were modeled before July and the week began, they serve as vital guides for anticipating where institutional algorithms are likely to react.
MSFT rallying 15% as the third-largest company in the world fueled tech, combined with cooler PCE inflation data and slowing GDP growth, helped calm the intense bond market sell-off from the day before. It remains impressive how accurately the levels acted as destinations for the SPX, and how MSFT reached our annual level of 459 included in my weekly charts.
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With that said, let us study the SPX levels for tomorrow. AMZN, the fourth-largest company, is moving strongly after hours (+8%), while AAPL, the second-largest company, continues to validate its bearish reversal thesis with a -7% move.
As we close out the final day of July, the market must hold the following weekly chart structure to set up a consolidation phase rather than a continued sell-off: