Expanding triangle indicates possible S&P 500 correction

S&P 500 index shows moderate growth on Monday amid high inflation, lower expectations of monetary easing and the imposition of new US tariffs. The index is currently trading in the range of 6,150–5,800 points. 

Markets were concerned with Friday’s data on retail sales. However, S&P 500 ended the week with a 1.5% gain. According to the U.S. Census Bureau, retail sales volumes declined 0.9% in January. It was worse than the forecasted 0.1% decrease and significantly lower than the revised December 0.7% growth. Due to weak macroeconomic statistics, investors revised their expectations of monetary easing by the Federal Reserve (Fed). Now the market forecasts two rate cuts in 2025 starting September instead of one cut that was expected previously. The forecast will be adjusted after the release of the Fed’s last meeting minutes on Wednesday, as well as speeches by the Fed's officials.

The US trade policy brings additional uncertainty to the market. President Donald Trump said Friday the new tariffs on automobile imports will take effect April 2. Of particular concern is the possibility of the tariff system including additional charges based on value-added tax in other countries. Such measures can limit the upside potential of S&P 500. 

From the technical point of view, the daily chart (D1) shows the formation of an expanding triangle. It indicates reducing volatility and growing uncertainty. The price has approached the upper limit of the figure, creating preconditions for a corrective downward move. The Relative Strength Index (standard settings) divergence confirms the decline within the triangle. 

Signal:

The short-term outlook for S&P 500 suggests selling. 

The target is at the level of 5,850.0.

Part of the profit should be taken near the level of 6,030.0.

A stop-loss could be placed at the level of 3,225.000.

The bearish trend is short-term, so a trading volume should not exceed 2% of your balance.