After a sharp 10% drawdown, the S&P 500 is attempting a bounce—but let's be real, it's not looking too strong.
The magnitude of this bounce is crucial for determining whether buyers can regain control or if we're just dealing with a temporary retracement.
Typically, retracements fall between the 38% and 62% levels of the original move.
Case in point, SPY just tagged the 38.2% retracement level and immediately got rejected.
The VWAP from the all-time high is sitting right at that same level, acting as a brick wall for buyers.
If the bulls want to regain control, they need to clear the 38% line at 575. Until then, this bounce looks weak, and lower levels remain in play.
And to top it off, price is now hovering at the VWAP from the March lows. A clean break below this level could open the door for another flush lower, potentially setting up a fresh round of selling pressure.
