Will the Selloff Continue?
On Thursday, October 1st I documented the technical reasons why a spike in $Cboe Volatility Index(VIX)$ was imminent, commenting in several editions that the move had a 2 week window to occur.
On Thursday October, October 8th I anticipated a bearish formation in price action for the $NASDAQ 100(NDX)$ , increasing the probabilities for a decline in the market.
This week’s selloff is not unexpected, neither the destinations considering specific price levels that I have been highlighting in the premium / paid content: 7684.7 for $S&P 500(.SPX)$ / 765.6 for $SPDR S&P 500 ETF Trust(SPY)$ , and 29,647 and 29,235 for $NASDAQ 100(NDX)$ / 720 and 711 for $Invesco QQQ(QQQ)$ .
Those levels were exceeded today, in one of the most bullish month of the year. Remember again: price action is primal, seasonality can be ruled out when technical signals anticipate the opposite move.
For this week, the bearish setups documented last weekend in the Weekly Compass played out: the bearish ones like $NVIDIA(NVDA)$ $Advanced Micro Devices(AMD)$, and QQQ reached bearish modeled targets, while $Costco(COST)$ $Wal-Mart(WMT)$ $Netflix(NFLX)$ reached their bullish targets (1,000, 116+, and 72.7 respectively) during the week.
Why are these Support and Resistance Levels important?
They identify potential support and resistance zones, assess overall market bias, and anticipate turning points in price action. They represent consensus price levels where institutional volume and market liquidity tend to cluster, they act as critical structural anchors for traders.
The S/R levels remove emotional bias by providing levels where price is statistically likely to react, stall, or reverse. They include a central level, (monthly, weekly, or daily), trading above a central level validates bullish bias, while trading below it signals a defensive or bearish stance.
Central Weekly Level
The S/R levels include a set of seven lines, three resistances, three supports, and one central level that validates bullish conditions when the price is above it, and bearish conditions when the price is below it. It establishes the core equilibrium price for the trading week.
This QQQ chart shows the CWL provided in this publication since March 2026, see the effect of losing this level and how healthy is momentum when the price is above it.
This level is updated every Friday for the week ahead including all the tickers in the watchlist.
Risk Management Framework: The CWL define invalidation points for bullish setups when it is breached, and it invalidates bearish setups when it is recovered, allowing for precise stop-loss references and objective risk-reward ratios considering the levels above and below the CWL.
Central Monthly Level
It works in the same way but the monthly levels are much wider in general, the principles are the same as the CWL. The CML represents major structural support or resistance. When a market undergoes a sharp correction holding the CML often distinguishes a routine sector rotation from a broader market breakdown.
Institutional algorithms heavily monitor monthly levels to rebalance portfolios, making a sustained breach of the CML a powerful signal of a larger trend change.
The CML posted here each month for the SPX since 2025 makes the case on how relevant is to lose the CML:
For this reason the support and resistance levels work for traders and long-term investors.
These levels are modeled every Friday for you, providing the information needed to assess risk and reward before the market opens on Monday. You don’t have to wait for the opening bell to decide your plan and which securities to trade; you have here the distances to essential levels and the setups suggesting whether they will act as support or resistance well in advance, so you make informed and serene decisions ahead of Monday morning.
Markets are always moving - and sometimes, the best move is knowing what works for you.
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Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
