S&P 500 dips due to profit-taking and NVIDIA’s upcoming report

The S&P 500 Index (SPX) has entered a local correction within a broader uptrend. The pullback was triggered by active profit-taking and mounting selling pressure, both driven by macroeconomic risks. Quotes are currently hovering below the opening level, at 7,360. This is a clear sign that bears are in the driver’s seat, at least in the short term. Investors are locking in gains as the economic landscape darkens.

However, on the daily chart, the Alligator Indicator still points to underlying bullish sentiment. Its lines remain in a classic ascending order: Lips at 7,314.9, Teeth at 7,192.0, and Jaws at 7,021.3. That said, they are gradually converging and curling downward, signaling that the current momentum is running on fumes. The index is holding above all three lines but is testing critical support at the green line (7,314.9). If prices fall below this threshold, the pullback could intensify.

The Chaikin Oscillator is singing the same tune. Though still positive, the indicator has sharply reversed downward, pointing to fading buying momentum.

Given this technical setup, the 38.2% Fibonacci retracement takes on particular significance. During a healthy pullback, this is precisely where bulls are expected to step in and spark a potential rebound. Whether this scenario plays out, however, depends on the fundamental picture, which remains tense.

Inflation risks continue to call the shots, weighing down on SPX. The logic is straightforward: the US-Iran standoff and the Strait of Hormuz crisis push crude costs higher, which, in turn, lift the Consumer Price Index (CPI). American Treasury yields are also climbing, offering an attractive investment alternative to riskier assets and triggering capital outflows from stocks.

That’s why NVIDIA’s upcoming report takes center stage. It could either confirm the resilience of the AI-driven rally or send quotes lower. Before the publication, market players are adopting a cautious approach.

Consider the following trading strategy:

Sell SPX during a rebound to 7,400. Place Take profit at 7,200 and Stop loss at 7,560.

This forecast remains relevant between May 18 and May 25, 2026.