S&P 500 sell-off targets 7,125 as index shows signs of exhaustion near all-time highs

The S&P 500 Index (SPX) keeps climbing higher, recently hitting a local peak of 7,371.4. Quotes are now sitting slightly lower at 7,368. Over the past few days, the chart has shown candles with upper wicks, pointing to mounting resistance and buyers’ exhaustion after the index’s surge of more than 1,000 points since late March.

Trading volumes add to the cautious sentiment. The April-May rally has unfolded with weaker indicator readings than those seen during the March decline. This pattern usually suggests the dominance of retail investors over institutional players. So, whether this trend will have solid legs is an open question.

The Chaikin Oscillator—still being positive—is sending mixed signals. On the one hand, its upward reversal since May 4 points to renewed bullish interest; on the other, the indicator is currently below April’s peaks—a discrepancy that makes it difficult to view these readings as a strong argument for a continued rally.

According to Fibonacci levels, today’s high (7,371.46) acts as resistance, while the 23.6% retracement (7,125) marks the first significant support. If prices decline to the 38.2% threshold (6,965), it could indicate a deeper correction or at least a sideways movement.

The fundamental picture is also ambiguous. The primary engine behind the current rally is an impressive earnings season: reports from over 80% of S&P 500 companies came in above expectations, with overall quarterly growth projected to be the strongest in four years. However, this growth is largely driven by the technology sector and the semiconductor industry, while most other segments of the economy are lagging behind. And let’s not forget the ongoing geopolitical uncertainty, which increases the risk of a new wave of escalation and a sharp shift in market sentiment.

Consider the following trading strategy:

Sell SPX from current levels, with Take profit at 7,125 and Stop loss at 7,450.

This forecast remains relevant between May 7 and May 14, 2026.