Investing in SPX from $6,870

The S&P 500 Index (SPX) will enter early January 2026 on a moderately bullish footing, though the push toward the key psychological $7,000 barrier is likely to be punctuated by bouts of short-term volatility.

1. Fund positioning

Institutional investors are now closing the books on 2025 with confidence. Major banks have already laid out ambitious goals for the next year, well above current levels (~$6,930):

Oppenheimer leads the pack with a $8,100 target for SPX, the highest on Wall Street.

Deutsche Bank and Capital Economics have set their sights on $8,000 for the index.

Concurrently, Morgan Stanley forecasts SPX to hit $7,800, while JPMorgan sees it trading around $7,500. 

In contrast, Bank of America offers the most conservative outlook for the index at $7,100.

Underpinning these calls is the expectation that earnings-per-share (EPS) growth will pick up speed—reaching 15.5% in 2026, up from 13.2% in 2025—providing fundamental fuel for the rally.

2. Technical battlefield and option levels

Resistance (call wall). The $7,000 level stands as the major gatekeeper. A decisive break above it in early January could unleash a wave of fear-of-missing-out (FOMO) buying.

Support. The $6,800–$6,840 area acts as a critical floor. Staying above this threshold keeps the uptrend firmly in play.

Gamma effect. Positive gamma is currently keeping a lid on volatility. However, as the price approaches $7,000 amid light holiday trading, the market becomes more vulnerable to sharp, liquidity-driven sweeps.

3. Sentiment check

Investor mood is quite optimistic, yet far from being euphoric. VIX trading in the mid-teens points to a lack of underlying fear. While investors are still hoping for a "Santa Claus" rally, many have already factored in the risk of a slower Federal Reserve (Fed) easing path in 2026.

4. Forecast for the week ahead (December 29, 2025 – January 5, 2026)

Short-term path. Look for the index to drift within a $6,900–$6,970 band during the final, low-volume trading sessions of the year.

Key risk. The "January Hangover" is likely to take place. The upcoming year could bring a shift out of overvalued Big Tech stocks into sectors like industrials and energy, alongside profit-taking after the impressive ~17% rally in 2025.

Catalyst to watch. The FOMC minutes on December 30 will be scrutinized for any sign of tougher Fed rhetoric for 2026, which could be the make-or-break signal for a SPX sustained move above $7,000.

All in all, the S&P 500 Index is gearing up for a push past $7,000. Nevertheless, large institutions suggest the main thrust may be delayed until the second week of January, once the post-holiday portfolio reshuffling is complete.

The overall recommendation is to buy SPX from $6,870. Place Take Profit at $6,970. Set Stop Loss at $6,800.

Always size the position so that your potential loss (protected by a Stop Loss) is no more than 1% of your account balance. If you can't open a position that meets such a risk criterion, it's safer to skip this trade and wait for a better, lower-risk opportunity.