Invest in SPX after modest correction and exit from overbought territory

The S&P 500 Index (SPX) keeps trading near all-time highs. However, investors have recently been seen actively taking profits in major tech shares. What does this tell us? The US stock market is still commanding plenty of attention, but participants are growing increasingly cautious after the index’s powerful rally.

The artificial intelligence boom remains the key catalyst. Major banks and analytical agencies continue to raise their S&P 500 target levels, citing impressive corporate earnings, a resilient American economy, and massive capital inflows into the AI sector. So, market players view these new technologies not as short-term speculations, but as long-term drivers of revenue growth and margin expansion.

Nevertheless, risks are not gone. The Federal Reserve (Fed) maintains its hawkish rhetoric, forcing traders to price in a rate hike this year. Elevated borrowing costs and rising Treasury yields limit the upside of stocks, particularly high-growth firms. This week, additional pressure came from a sell‑off in semiconductor shares and concerns that corporate spending on AI infrastructure may prove excessive or unprofitable. Given that tech companies account for the largest share of SPX, a correction in this segment could soon ripple through the entire index.

All in all, the fundamental picture stays quite positive, though reversal risks are on the rise. On the technical side, another upward move to the 7,525 resistance level is possible.

The ultimate recommendation is to buy SPX at the current price, targeting 7,525 within one month. To mitigate the risk of adverse market movements, place a Stop Loss order just below support, at 7,350.