S&P 500 braces for volatility ahead of major tech reports

The S&P 500 Index (SPX) is hovering around $7,468, pulling back from its early July highs as a deepening correction in the semiconductor and artificial intelligence (AI) sectors weighs heavily on it. Profit-taking has been the name of the game, with investors locking in gains after the latest rally.

But this is only part of the story. Compounding the pressure are projections of slowing capital expenditure (capex) growth at big tech firms and the industry's growing debt load. Some portfolio managers are brushing it off as a healthy market rotation rather than a full-blown reversal of the fundamental uptrend. Nevertheless, such a narrative is about to face its first real test this week.

And the timing couldn't be more critical. Earnings season is now stepping into the spotlight as a key pillar of support. Forecasts predict a sizzling 26% year-over-year profit jump for S&P 500 companies. All eyes are on big tech and chipmaker reports—their commentary on AI infrastructure spending could either steady the ship or pour gasoline on the sell-off.

On the flip side, Middle East tensions involving Iran are keeping oil prices elevated and fanning inflation fears ahead of the Federal Reserve (Fed) meeting on July 28–29, though this issue is in the background.

Now, let's turn to the charts. On the technical front, SPX is staging a cautious recovery, trading near $7,468.0 in the July 20 session. The near-term tone remains mixed: the index is stuck below the 20-period EMA resistance at $7,491.4, but it is holding above the 50-period EMA support at $7,414.4. The Chaikin Oscillator is still in positive territory. However, its sharp decline from recent local peaks is a red flag, signaling that buying pressure is fading and the current bullish momentum is on shaky ground.

For those looking to make a move, pay attention to the trading plan down below:

Sell SPX from current levels ($7,468.0). Place Take profit at $7,300.0. Set Stop loss at $7,570.0.

This forecast holds true from July 20 till July 27, 2026.