The S&P 500 Index (SPX) is getting lower and lower at the hourly timeframe—a sign that buying momentum is fading. Two key headwinds are weighing on prices: a seasonal correction in stock market instruments and the proximity of the psychologically important 7,000 level. In tandem, these factors may knock the index down, triggering a deep drop to the 6,100–6,200 range. As this correction unfolds, automated trading algorithms are likely to kick in, accelerating selling pressure during market declines of 5%, 10%, and 15%.
Taking this as the baseline scenario, entering a short position from the 6,900 resistance level—with Stop loss at 7,000 and Take Profit at 6,660—could be a decent strategy. In this case, the potential reward-to-risk ratio stands at 2.5:1.
However, keep in mind that selling such strong indices as the S&P 500 always carries elevated risk, because it runs counter to the broader global trend.
The overall recommendation is to sell SPX from 6,900 if you align with the correction scenario. Profits should be taken at the level of 6,660. Stop Loss could be set at 7,000.
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.
