The S&P 500 index is recovering moderately on Monday amid uncertainty caused by President Donald Trump's trade disputes between the US and its major partners Canada, Mexico and China.
In a recent interview, Donald Trump characterized the current economic situation as a “period of transition”, when asked about the possibility of a recession in the country. Over the past two weeks, the S&P 500 index lost more than 6% of its value, because the US imposed tariffs against key trading partners. This exerted pressure on long-term investors, whose pension savings have noticeably decreased.
Nevertheless, increased volatility created favorable conditions for options traders. The Cboe Volatility Index (VIX) exceeded 26 points and reached levels rarely seen since 2020-2022. The proportion of zero-day-to expiration options reached a record 56% of total S&P 500 trading volume in February, reflecting increased activity by short-term market participants.
Stock correlation also approached the highest values in recent months. This increases risks and at the same time opens up additional opportunities for hedging. Despite high intraday volatility of about 2.2%, analysts characterize the current sell-off as “orderly,” with no signs of panic.
High volatility may persist this week.
From the technical point of view, on the daily chart (D1) testing of the lower boundary of the expanding triangle is observed. Relative Strength Index indicator (standard parameters) has entered the oversold zone. This indicates a possibility of an upward reversal, with the price returning to the center of the figure.
Signal:
The short-term outlook for S&P 500 suggests buying.
The target is at the level of 6000.0.
Part of the profit should be taken near the level of 5850.0.
A stop-loss could be placed at the level of 5600.0.
The bullish scenario is short-term, so a trading volume should not exceed 2% of your balance.
This content is for informational purposes only and is not intended to be investing advice.
