I'm not worried about the gap down. I'm worried about the recovery.
Here's why that matters. SPY has been building a bear flag since late February. A bear flag is what happens when the market sells off hard, bounces sideways in a descending channel, and then breaks lower. It looks like a pause. It isn't.
The market is just catching its breath before the next leg down.
What confirmed it today was the MACD cross, a momentum indicator that tells you when the trend has shifted.
The last time we got this exact setup, a cross right at the tip of the flag, we sold off, had one more bounce, and then dropped hard. That's the pattern playing out right now.
Two scenarios for this week. One, we get a gap down from some Iran-related headline and just start bleeding from there.
Two, we grind up toward the 200-period moving average, that's the big resistance line overhead around 659, get rejected, and roll over. Both scenarios end the same way.
But here's what's actually keeping me up. This bull run only lasted six months before it rolled over. That's short. The previous ones had longer, more bullish foundations underneath them.
When you come off something that fragile and break down this hard, the recovery doesn't just snap back. It takes something. Real economic news. A catalyst the market wasn't expecting. Without that, every bounce is going to get sold.
I've been trading this correctly. We know what's coming. The timing is always the question, never the direction.
Watch the 659 level. If we poke above it and get rejected, that's your confirmation the next leg lower is loading.
Rock On,
Voz
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