SPX selloff to follow once it consolidates below $6,600

As of March 20, 2026, the outlook for the S&P 500 Index (SPX) remains moderately bearish, weighed down by the hawkish outcome of the recent Federal Reserve (Fed) meeting and the ongoing turmoil in the energy market. The US central bank kept interest rates in the same 3.50%–3.75% range but made it abundantly clear that policy easing is not coming anytime soon. Inflation forecasts for 2026 were revised upward to 2.7%, and market predictions of imminent rate cuts fell sharply. This shift in the Fed’s monetary path was largely driven by the escalating tensions in the Middle East and persistent threats to supply routes through the Strait of Hormuz—the world’s key energy artery. Under such circumstances, crude prices have settled firmly above $100, stoking stagflation fears among investors—a toxic cocktail for equities. Traders are now monitoring the situation in the sea, as any sign of de-escalation could trigger a technical rebound, with players rushing to buy the dip. However, the overall picture remains the same: the Fed’s hawkish tilt leaves little room for SPX to rise.

We believe markets are unlikely to give up on testing the $6,600 support level—the index’s so-called “waterline”. In fact, traders seem to be obsessed with this threshold. Once breached, the 200-day simple moving average (SMA200) will come into play almost immediately. For major players, this technical setup marks a dividing line between bearish and bullish territories. If the S&P 500 closes the week below $6,600, automated trading algorithms (Stop Loss orders) will kick in, aggressively sending quotes down to $6,500 within a few sessions.

Moreover, a large pool of put options—“insurance” against price falls—is also clustered near $6,600. As the S&P 500 approaches this strike level, market makers are forced to sell SPX futures to hedge their positions. What we see is a so-called “magnet effect”, when the index is drawn lower, though the moves can be sharp and erratic.

Now, let’s assume the $6,600 threshold holds. Then, a technical rebound or a short squeeze could follow, with bears closing their positions.

On top of that, don’t rule out false breakdowns. The S&P 500 could dip into the $6,585–$6,590 range before attempting to climb back above $6,600. Our key signal for what lies ahead is the final hour of trading in New York: if the price drops below the threshold, the asset is likely to struggle next week.

The overall recommendation is to sell SPX on Monday, March 23, 2026, if the index closes the week beneath $6,600. Profits should be taken at $6,400. Stop Loss could be set at $6,800.

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.