SPY officially broke back below the rising wedge. I suspect more selling is coming over the days ahead, possibly into the election. However, we’ve seen SPY recover pretty quickly over the last year, so that’s something I’ll be careful of.

Does this mean a new downtrend is forming?

Bulls have enjoyed pretty easy price action the last nine months, but anyone who’s been trading longer than 2024 knows that it isn’t always straight up. Volatility hasn’t really been a factor over this rally from 400 to 565, but that might change now that the VIX is finding some support. We’ll see if the VIX can continue to remain above 15 over the coming weeks.

New resistance

After the breakdown today, I’ll be watching for continued selling below 555. If SPY recovers that in the morning, we’re back to where we were last week.

The massive selling we saw at the beginning of August isn’t what I’m looking for in a downtrend. Like the rally last November, this sell-off didn’t respect any technicals and was brought on by BOJ fears. I’m looking for slow and controlled selling to bring an air of price discovery back into markets.

NVDA

Unlike SPY, NVDA is showing some technicals come back into play. We found support at 106 today, so I’ll be watching if price breaks down below that level tomorrow. Below that, there’s support at 95 and a potential descending broadening wedge pattern.

Wrapping up

These are the kind of conditions that make trading exciting. Traders can capitalize on violent swings as long as prices respect levels. I’ll be watching for more opportunities as the markets form some new support and resistance in this new era of volatility.