SPX Weekly Outlook – Monday, July 22

From bounce to brink — Powell, vol, and the July endgame.

SPX Weekly Outlook – Monday, July 22
From bounce to brink — Powell, vol, and the July endgame.

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📅 After the Close – Friday, July 18

$SPX finished the week at 6296.79, just off a fresh intraday all-time high of 6315, which was tagged at Friday’s open before fading back into the prior range. Despite the pullback, the index closed higher on the week — extending YTD gains to +7.83%, even with the Q1 tariff drawdown in the rearview.

It was a quiet expiration week by headline standards, but one where structure and flows told the story perfectly.

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🧭 Structure Did Its Job

$SPX spent most of the week ping-ponging inside a tight 6235–6275 range, orbiting around the 6250 magnet — a clear mechanical midpoint. That zone was tagged multiple times until Friday morning’s ramp cleared it.

The early-week flush to 6200 was textbook: macro headlines triggered the move, and dealer positioning caught the fall. Buyers stepped in exactly where they were supposed to. Powell–Trump rumors, Waller’s dovish tone, TSM and Nvidia earnings — they all layered on and helped shape the bounce. CPI gave bulls a pop Tuesday, but macro reasserted itself midweek with rising yields and dollar strength dragging risk back down.

Price tested both edges of the expected move — 6200 to 6315 — but never broke. Vol stayed pinned, and premium sellers dictated the flow. We closed in the upper half of the expected move and squarely within structural expectations.

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💸 The Real Problem – No Cash Rotation Yet

This rally isn’t being fueled by new capital flows from real-money investors. Most remain parked in money market funds earning over 5%, and until the Fed cuts short-term rates, there’s little incentive to move that cash into equities.

If Powell doesn’t deliver, that cash stays sidelined. And with Treasury issuance exceeding money market absorption capacity, rising long-end yields could put upward pressure on rates, drain liquidity, and cap equity upside.

This isn’t a bearish call — just a reflection of how sensitive the rally remains to policy and liquidity inputs. For now, the drift holds. But it’s being powered by positioning, not fundamentals.

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🌬️ Volatility Signals – Compression Still On

• HV20 (realized vol) is now at 9%. A drop to 8% would flag overbought volatility conditions — historically a warning sign for mean reversion.

• VIX spiked to 19 midweek but faded fast, now back under 17. Complacency reset.

• A new McMillan Volatility Band (MVB) Sell Signal was triggered during the Powell flush. It remains active unless $SPX closes above the rising +4σ band (currently near 6340). The downside target band sits near 6050.

None of these suggest immediate danger — but they do frame the setup for a shift if conditions change.

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🧃 Flow Setup – Supportive, But Shifting

The rally remains comfortably supported by mechanical flows — charm, vanna, and passive demand continue to do their job. Even with buybacks beginning to taper, both Goldman and Morgan Stanley still show steady net inflows across most channels.

Hedge funds remain underweight, which keeps the door open for potential chase behavior if we get continuation. But as we move deeper into earnings and macro season, the market may become a bit more sensitive to surprises — not broken, just more reactive.

The July 30–August 1 window brings a rare trifecta: FOMC, monthly OPEX, and EOM flows. That moment likely sets the tone for how this bid holds — whether we consolidate, expand, or reset into August. Until then, structure and flow remain supportive.

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🌍 Macro Backdrop – Calm Before the Test

This past week benefited from thin summer liquidity, systematic bid, and predictable gamma overlays. That dynamic doesn’t disappear next week, but it becomes more vulnerable to disruption.

We’re approaching an inflection point. Powell’s tone, liquidity runoff, and positioning shifts could all converge to mark a regime change into August. Until then, the playbook remains to lean on structure and expect mean reversion unless proven otherwise.

WEEKLY expected Move (daily chart time frame)

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🛠️ Key Technical Support Levels

Support zones remain clean below. If 6200 gives out, the next levels to watch are:

• 6150 — Prior highs + retest level from June

• 6020–6060 — June 23rd gap-up region

• 5920 — Former major support

• 5870 — Approximate 200DMA — major downside pivot

While these levels remain distant, they form the backbone of any downside structure into August.

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