Go short on SPX down to $7,500

The S&P 500 Index (SPX) has recently stalled at around $7,650, and a brief rebound has given way to renewed selling. The month ahead seems to be trending toward a deeper correction, with high interest rates and doubts over the payback of artificial intelligence (AI) acting as the main drags.

This burden starts at the top, with the Federal Reserve. At its October 28 meeting, the central bank left interest rates unchanged at 3.75%–4.00%, though two officials called for a 25-basis-point hike. With hawkish policy showing no sign of fatigue, the ceiling on US equities remains firmly in place.

October 29 brought macro data that only reinforced the picture of a resilient American economy: third-quarter GDP grew at an annualized 3.4%. Meanwhile, year-over-year inflation, as measured by the Personal Consumption Expenditures (PCE) index, crept up to 3.6%. This sturdy expansion, combined with sticky price pressures, only strengthens the case for the regulator to tighten further.

Earnings season is turning up the heat as well. As of October 23, FactSet figures showed that 83% of reporting companies had beaten analyst expectations. Yet, a weak print from Alphabet, paired with unease over the enormous capital expenditures of tech giants, was enough to spark a sell-off. By the October 29 close, the Nasdaq had shed roughly 1.4%—a clear signal that tech sentiment is souring.

The chart tells the same story. The S&P 500 Index tried to clear the $7,800 resistance but failed, and the downtrend has resumed. Breaching the $7,650 support would pave the way for additional losses, with $7,500 being the initial target.

The ultimate recommendation is to sell SPX at the current price ($7,650), aiming to reach $7,500 within two weeks. To keep risk in check if the market plays against us, place a Stop Loss order at $7,750.