The short-term outlook for the S&P 500 Index (SPX) may be influenced by order flow dynamics in two key instruments, such as futures traded on the Chicago Mercantile Exchange (CME) and the SPDR S&P 500 ETF Trust (SPY), the largest exchange-traded fund tracking the index.
Analysis of the SPX futures order book reveals a concentration of call options above the current price, suggesting that bulls are seizing the initiative in the market. However, a significant cluster of buy positions is also established below this level, down to $6,810. A similar pattern is evident in the SPY ETF's limit order book, where purchase orders dominate, reinforcing a solid support zone. At the same time, many put options are now being withdrawn.
Consequently, the S&P 500 Index is likely to trade higher in the near term.
The overall recommendation is to buy SPX. Lock in profits at the level of $6,900. A Stop Loss order could be set at $6,790.
The volume of the 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.
