SPX slid beneath six-month low amid flight from risk

The S&P 500 Index (SPX) continues to trade within a downtrend, plunging to six-month lows. Geopolitical tensions in the Middle East and the resulting surge in energy costs keep weighing on the asset. Market participants are growing increasingly convinced each day that this crisis could drag on longer than previously expected. They are currently factoring in prolonged oil disruptions, which might dampen traders’ risk appetite.

Expensive fuel tends to put the brakes on multiple levels of the economy at once. The US Federal Reserve (Fed) is typically the first to react, adopting a more hawkish stance and signaling tighter monetary conditions—a classic sign for investors to flee speculative assets. At the corporate level, rising logistics and energy costs are now squeezing operating margins, forcing companies to reevaluate their investment plans. Households are also revising their budgets, prioritizing fuel over other discretionary spending.

This pessimistic dynamic is clearly seen in the stock market. The number of declining shares far exceeds those that are still managing to stay afloat. More importantly, the heavyweight tech sector is currently showing signs of weakness, dragging the S&P 500 lower.

From a technical perspective, the index has been in the downtrend since late February. It pierced through a local low, falling to levels not seen since September 2025, before rebounding from a downside gap in early Monday trading. The Stochastic Indicator sits in the lower part of neutral territory, hinting at potential oversold conditions. Meanwhile, the Chaikin Oscillator, though still in the negative zone, has just stopped its descent and begun to tick higher—a sign that volumes may be stabilizing and a temporary recovery could be in the cards. However, SPX is likely to remain on the back foot until the macroeconomic fog clears out and energy prices get back to normal. Without that, the index has little firepower for a sustained reversal.

Consider the following trading plan:

Sell SPX near 6,530 during the current rebound. Place Take profit at 6,380 and Stop loss at 6,630.

The forecast is valid from March 23 till March 30, 2026.