The situation in Iran is deteriorating, oil prices continue to climb, and the stock market remains locked in a persistent selloff. However, it is essential to have in mind that market crashes rarely move in a straight line.
History shows that even during the most iconic collapses, such as the Dot-com bubble, the Great Financial Crisis, or the bear markets of 2018 and 2022, the decline was a process. These periods lasted for weeks or months and were characterized by sharp, intermediate relief rallies that occurred before the selling resumed. Even the 2025 Tariff Crash followed this pattern, with historic single-day surges providing temporary breathing room amidst the volatility.
In recent history, only the COVID-19 crash of 2020 moved with such velocity that it bottomed in roughly four weeks before a V-shaped recovery began. Aside from that unique event (which was more severe than the current energy-driven shock) major selloffs typically involve a cycle of reaching deep oversold conditions, followed by significant relief bounces as the stock market breathes.
As posted yesterday, the support and resistance levels frame a -1.6% to +3% move for next week in the SPX, considering the first layers around the central weekly price level.
The VIX has closed above 25 during four consecutive weeks in a row, that condition favors bears, but as we have seen during the same weeks, volatility also brings quick rallies that may squeeze short positions if risk is not managed well. For that reason I’m posting in the paid subscribers chat daily price levels for the SPX, the main ETFs like SPY, QQQ, SMH, VXX, and DIA, along with all the magnificent seven, metals, and other major stocks. If you trade using levels, those daily insights are for you.
High Probability Trades
Last week, the setups blueprint anticipated with prudence bullish reversals for PLTR🎯, JPM🎯, NFLX🎯, AAPL🎯, SMH🎯, and AMD🎯. All of them happened reaching and exceeding their bullish targets; and as the VIX above 25 suggests, volatility followed with a selloff. The bearish setups highlighted last week for META🎯 and AMZN🎯 also exceeded their targets. The only security that didn’t move as expected was XOM, which despite of overbought conditions, it continued in rally mode. 8 out of 9 setups reached their targets🎯🎯🎯.
Having specific support and resistances for the week help anticipating potential reversal areas. Upgrade your subscription to paid and get the tools for next week.
My last two publications have real life examples of managing stop losses, which is essential for survival in this market.
Today’s analysis brings a zoom in to previous bottoms for the S&P 500 / SPX.
This publication constantly studies the following securities in order to monitor rotations with the momentum map and individual analyses. If you trade some of them, this publication is for you:
Indices & Futures: SPX, NDX, DJI, IWM, ES=F, NQ=F
ETFs: SPY, QQQ, SMH, TLT, GLD, SLV, DIA, VXX
Megacaps: AAPL, MSFT, GOOG, AMZN, NVDA, META, TSLA, BRK.B, LLY, WMT, AVGO, COST, JPM, XOM, PLTR, NFLX, V, AMD
Crypto & Related: Bitcoin, Ethereum, ETHA, IBIT
Leveraged ETFs: TQQQ, SQQQ, UDOW, SDOW, UPRO, SPXS, URTY, SRTY
Subscribe and unlock their setups for next week in a single dashboard that highlights the most probable moves for next week.
Today’s Agenda:
Special Study of Bottoms for the SPX: Major bottom? or just relief rally?
The Momentum Map: Analyzing the stage of every security in a single chart.
Market Context: Technical charts and price levels for U.S. Indices, Volatility, Breadth, and Crypto.
Setups Blueprint: Entry levels for short and long setups with price targets and invalidation levels for all the securities in the watchlist prioritizing stronger setups.
Deep Dive: Visual individual analysis of Metals and Mega Caps.
Let’s begin,
SPX: What the Last Four Bear Markets Suggest is Coming Next
Let’s assume that we are in a bear market, so we don’t wait until the -20% mark is reached. We have studied that being below the CML for long time means trouble, and how relevant are the key zones where the market should have found support as the 23% fibonacci retrace posted on Wednesday along with the third monthly support. That confluence zone was breached this week.
It doesn’t change how rare would be to see a bull market with only one -5% pullback, this is technically a normal correction that can be part of a bull market, but we must trade the market we have in front of us and considering all the potential risks.
You may remember I posted two weeks ago a study of pullbacks and corrections since 1970, I revisited those charts and the current attempt to visit the highs of the previous bull market (in this case the top at the beginning of 2025), is a move that happened in 1972 and was almost completed in 1999. For now I’m considering that as the worst case scenario for the current move.
Oversold conditions have been seriously reached, see the breach of the lower weekly Bollinger band (represented with %B in the subchart) and the Stochastic already oversold. Those conditions have triggered relief rallies, even in the 2022 bear market. In 2023 they set the bottom of the correction.
The case repeats for the COVID crash (Bollinger breached and oversold Stochastic in the weekly), but most importantly (given the global implication of stopping the economy in 2020), the 2018 bear market that also triggered a bounce and a consolidation before continuing with the second half of the decline.
The RSI may not be as oversold as in previous bottoms, but the confluence of indicators suggest that a bullish reversal is around the corner and the Central Weekly Level will be recovered as soon as next week.
The red line in the chart above can be considered a worst case scenario for a relief bounce and a continuation of the selloff if the price continues with this series of fake rallies next week.
If the market does not set a bounce next week, it would be against the trend of the last 25 years including the dot com and the great financial crisis, making this more similar to the COVID crash. It would be odd, but there are more escalations than progress between U.S. and Iran.
When we zoom out 25 years, the relief bounce thesis gains more references, with spikes in the SPX when the Money Flow is this low. Relief Bounce = Spike before bearish continuation unless CML is recovered.
For now, the SPX must recover the CWL of $6,458.9 (+1.4%) and jumping above it to target $6,561.6 (+3.0%). If it doesn’t happen, the overextension could continue toward $6,266.1 (-1.6%) with a potential extended move to $6,163.3 (-3.2%).
So is the bounce expected on Monday? Not necessarily this time, the structure has suffer a lot of damage, it can be a process. If the price opens or stays on MONDAY above the following levels, the chances for the bounce increases:
Must stay above on MONDAY to consider a relief bounce imminent:
SPX: 6,392.9, and ideally recover 6,429.8
SPY: 636.6 and ideally recover 640.1
QQQ: 565.1 and ideally recover 568.5
IWM: 244.1 → 245.8
DIA: 453.1 → 455.8
If this week is different than the previous ones and we have a gap down on Monday, that gap would act as a magnet since would be happening at oversold conditions.
SPY: Above CWL $643.3 (+1.5%) targets $653.4 (+3.0%). Below it, bearish target is $623.9 (-1.6%) with a potential extended move to $613.8 (-3.2%).
The Momentum Map
There are many securities at extreme conditions, most of them in the lagging quadrant. We will study the charts for META, that is brewing a long term buying opportunity (it is looking so much like 2022), GOOG that breached its lower weekly Bollinger band and the oscillator is oversold, AAPL that if the 40 and 200MA prove their strength it could bounce, NFLX that is drawing a bull flag.
COST and WMT have worked as safe havens, if tech bounces next week (again, IF), staples could underperform.
Crypto needs the relief bounce more than any other security, since Bitcoin and Ethereum have been long ago in bear market and the 10 weekly average continues setting the downtrend.
VXX looks like the ideal long position according to the momentum map; caution is key since the VIX reached overbought conditions that may bring a brief decline for volatility.
Market Context
VIX: Still high and overbought in the daily and weekly. The move doesn’t show bearish conviction (bullish for the market) retracing as in previous occurrences highlighted. The bearish Stochastic crossover has been a signal that anticipated red candles in the past, but this long wicked candle requires confirmation with an initial decline to 26, where there can be support for another spike. If breached as the historical relief bounces in the SPX suggest, 20 is the next layer to breach for bullish continuation in the SPX.
BREADTH: The stocks above their 20 and 50 DMA are below 15% and nearing 20% respectively. This is another reason to expect a relief rally. The number to watch is a potential recovery of 30% for both indicators.
NDX: The price is currently sitting at the edge of a major volume shelf and remains oversold with more than half of the weekly candle closing below the lower Bollinger Band. The Money Flow Index has dropped below the 2025 bear market lows. These factors suggest a relief rally toward the 40-week moving average. If we are in a major correction or bear market, that level will act as definitive resistance; a rejection there would likely lead to a retest of the early 2025 highs (red line), aligning with the SPX worst-case scenario.
Bearishness persists below the CWL of $23,562.3 (+1.9%) targeting $22,659.5 (-2.0%), with a potential extension to $22,186.1 (-4.1%). A bullish reversal triggers if the CWL is recovered for $24,035.6 (+3.9%).
QQQ: Above CWL $573.1 (+1.9%) targets $584.6 (+3.9%). Below it, bearish target is $551.1 (-2.0%) with a potential extended move to $539.6 (-4.1%).
DJI: Currently testing the 2025 highs reached prior to the bear market (the worst case scenario for the NDX and SPX). This area may serve as support. While many recall the "Great Rotation," the Dow has actually declined with the highest velocity this month, dropping as fast as the technology sector following the monthly shooting star posted at the end of February.
If price continues below the CWL of $45,649.7 (+1.1%), the target is $44,581.0 (-1.3%) with a potential extended move to $43,994.6 (-2.6%). Recovery of the CWL shifts the target to $46,236.1 (+2.4%).
DIA: Above CWL $456.4 (+1.1%) targets $462.3 (+2.4%). Below it, bearish target is $445.5 (-1.3%) with a potential extended move to $439.6 (-2.6%).
IWM: Similar to the Dow, the IWM is finding support at a key confluence zone consisting of the 40-week moving average and the peak seen before the 2025 bear market. This level should act as a floor; however, if it fails, the next defensive zone sits at $226.0. With the Stochastic indicator showing oversold readings, a bounce is probable; otherwise, $226.0 remains the expected destination for this correction.
Immediate bearishness below the CWL of $246.2 (+1.3%) for $239.3 (-1.6%), with a potential extension to $235.5 (-3.1%). If the CWL is recovered, the bullish target is $250.0 (+2.8%).
SMH: Semis recently breached the 20WMA, a level that has held since the 2025 bear market and the "tariff crash". There is a lack of nearby support, leaving $349.0 as the next critical monthly level to watch. While the daily price action has breached the Bollinger Bands, this is not yet as oversold as the other indices, and the current candle structure suggests bearish continuation for the semiconductor sector, any bounce would be triggered by the overall market and not semis leading the way.
Continuation below the CWL of $383.3 (+2.4%) targets $364.0 (-2.8%), with a potential extension to $353.8 (-5.5%). Recovery of the CWL opens the path to $393.5 (+5.1%).
BITCOIN: BTC has again faced rejection at the 10-week moving average, which is a highly bearish signal. Any breach of the $65,9K annual level opens the door to the next defensive zone at $59.2K, where the 200-week moving average sits. For a recovery to take hold, Bitcoin must reclaim $68,9K. Only by recovering that level as the central monthly level can Bitcoin return to a consolidation phase.
IBIT: Above CWL $38.4 (+2.7%) targets $39.8 (+6.4%). Below it, bearish target is $36.1 (-3.5%) with a potential extended move to $34.8 (-7.0%).
Setups Blueprint
For the week ahead, there is a high likelihood of a relief rally. We will remain focused on the major indices, as the SPY, QQQ, IWM, and DIA are showing potential for a trend reversal. IF THEY recover their Central Weekly Levels, we can begin considering individual setups.overy or invalidation levels and that’s the reason of my prudence. For instance, TSLA needs a 3% jump, PLTR needs 4%, and META requires 5%. For this reason, we will prioritize the indices first and monitor the VXX for a potential mid-week reversal.
AMZN could have a spike but it is aiming at a gap fill that will be described below in its chart. Regarding specific setups: XOM is unlikely to reverse radically (hence potential bullish continuation), and the bullish flag thesis for NFLX remains in play. Above all, stay prudent and patient in this volatile environment. Remember, when a setup is marked in gray, it indicates a call for prudence and a potential reversal rather than a guaranteed hit on the bullish target, especially while the
Currently, many stocks remain significantly far from their recVIX remains elevated.
Deep Dive In individual Charts
SLV: The chart for SLV continues to validate the MACD crossover, and the latest candle suggests a potential bullish reversal. However, the upper wick makes it imperative for Silver to hold above $63.4 to confirm this reversal. This is a manageable move, as the close aligned with next week’s central weekly level.