Yesterday's decline in the S&P 500 Index (SPX) was primarily driven by losses among major whales companies, including NVIDIA, Apple, Alphabet, and Amazon. This downturn aligns with the historical pattern of seasonal weakness in September, though it began later this year. Recent comments from Fed Chairman Jerome Powell also shaped the market context. In his view, asset prices seem to be overvalued. While his colleagues voiced contrasting policy perspectives, the official said the central bank has to walk a fine line in making upcoming decisions. Some analysts compared this rhetoric to former Chairman Alan Greenspan's 1996 speech on "irrational exuberance", which caused the market to surge.
Some stock valuation metrics have reached their highest since 2021. Further gains could push them to levels not seen in decades, even in the Internet boom era. With the S&P 500 currently valued at 23–24 times its projected earnings, and factoring in the outlook embedded in this statistic, annual earnings growth is expected to hit approximately 15% over the next five years, a truly significant figure.
Economic conditions for a correction are long overdue, and the likely target is the lower boundary of the ascending channel at 6,530.
The ultimate recommendation is to sell SPX. Profits are taken at 6,530. Stop loss is placed at 6,700.
The volume of your open position should be calculated so that the potential loss (protected by a Stop Loss order) does not exceed 1% of your deposit. If your account balance does not allow opening a position of this size, it is better to avoid entering the market on this signal and wait for other trade options that meet low-risk criteria.
This content is for informational purposes only and is not intended to be investing advice.
