Markets thrive on clarity — and the government shutdown has been a clear obstacle. With Thune moving to tee up a vote to end it and Senate Republicans preparing to stay through the weekend, an agreement looks at least possible in the coming week. This should bring some relief to the market, which has been dealing with a week of weakness after a blow off move last week.

Now that last weeks lower gaps have been filled and SPY has seen its “normal” 3% pullback, the big question is whether the market rips higher again to new all-time highs—or if this pullback is finally different.

In the “new all-time highs imminent” camp, we have the setup that has worked for months. Since the May 12th breakout gap, every selloff has been brief—typically around 3%—before buyers step back in and drive the indexes to new highs within a couple of weeks. The short-term history and overall market momentum still support that outcome.

There’s also a long-running Elliott Wave pattern that suggests we’re near the end of a Wave 4 correction, however the Elliot Wave on this pattern is a bit wild so it’s not my primary form of analysis. We also have the dot-com analog that continues to point to a move toward a move higher into the end of the year. Supporting this view are multiple layers of strong technical support just below current prices, particularly the 50-day SMA and 10-week EMA (both near $663), which align with the April volume shelf. If we continue to follow the dot-com roadmap closely, those levels should hold until a deeper retest later in December or early January.

Most of the big names that have held up the market are now sitting near key support zones. While they remain relatively elevated, as long as these levels hold, the bullish structure remains intact. Historically, every time May–October has been 100% bullish, November has also been positive. Combine that with the fact that we’re seeing fear near all-time highs—a rare setup for a major top—and it adds weight to the “bulls stay in control” scenario.

SPY Daily

On the other hand, the bear case argues that we could be in for something bigger—potentially a break below the 100-day SMA and a retest of the previous all-time high around $610, or even the 200-day SMA. One of the more concerning signals comes from the 3-day chart, which shows SPY trading within a massive parallel channel since 2020. Recently, we gapped above the channel, then gapped back inside, leaving behind what resembles an island reversal near the highs after one of the strongest runs in history. That alone is enough to warrant caution. We’ve also seen bearish RSI divergence since September—a sign that momentum is waning, even if a top isn’t imminent.

SPY Channel

We’re also starting to finally see weakness in some of the high-flyer names. META, for example, is now down 22% from its all-time high, and many smaller, high-beta names are getting crushed. Whether this is healthy rotation or the start of broader risk-off behavior depends on your bias. I tend to focus on the Trillion Dollar Titans and the banks, as they largely drive SPY—and for now, those are still holding up reasonably well. As long as that continues, I lean bullish.

META

Bitcoin, however, is on the edge. It’s currently testing the 120-SMA on the 3-day chart. It narrowly avoided a close below the moving average earlier in the week and is once more trading below it. We’ve seen brief one candle breaks below before, followed by strong recoveries—but if BTC closes below it this weekend, it would favor a deeper pullback and if history repeats, the end of the bull market. On the flip side, a strong bounce from here would fit the pattern we’ve seen all cycle: a 20–25% drop after a bull trap, followed by another leg higher.

BTCUSD 3 Day Chart

Overall, I still favor the bullish thesis: support holds soon, SPY makes new all-time highs into mid-to-late December, and volatility picks up after that. That timeline could easily be off by several weeks, putting us in a bigger topping pattern right now, but fighting this trend has been a losing game all year. Until proven otherwise, the bulls are in control.

My key levels are straightforward. A close below $660 on SPY would be my first warning sign—it would mean a break below the 10-week EMA, 50-day SMA, and volume shelf. That could trigger a move to the 20-week EMA or 100-day SMA, which would still fit within a bullish continuation pattern. But if we break the 100-day SMA with conviction, that’s when I’ll shift gears and assume we’re heading for a full retest of the prior highs and the 200-day SMA. Until then, I’ll keep buying the dip—and protecting below my key levels.