Buy SPX after correction to 4800 level

It is currently difficult to assess how long financial markets will take to digest yesterday's trade tariff news, as well as how deep markets may decline. Uncertainty and the chaotic nature of the protectionist policies will remain the primary factors of the decline.

Looking at the historical performance of the S&P 500 index over the past seven years, one may identify three significant corrections triggered by fundamental factors that nevertheless fit within the technical patterns of financial market behavior. In each case, when the S&P 500 was significantly overheated, a triggering event led to a technical correction that returned prices to previously broken resistance levels.

In the current scenario, the unfolding trade war may help bring the previously overbought US stock market back to more reasonable valuations. If the bearish correction intensifies, the broad US market index has a good chance of falling to the 4800 mark, after which a new growth phase is likely to begin. During this period, markets will digest negative developments, tariffs may be adjusted and optimized, businesses will adapt to new international trade rules, and some companies will either go bankrupt or undergo restructuring.

The target for the next upward movement in SPX would be the psychologically important 6000 level, a level that prices attempted to surpass during this economic cycle before initiating the current pullback. The bearish correction may last until late 2025 and find support in the background of seasonal factors during the ‘strong’ months for the US market — namely, October and November. Overall, the proposed scenario for SPX is not fundamentally negative, but rather reflects the multi-year patterns in the change of stock market cycles.

The overall recommendation is to buy SPX from the level of 4800. 

Profits should be taken at the level of 6000. A Stop loss could be set at the level of 3700.

The volume of the opened position should be set in such a way that the value of a possible loss, fixed with the help of a protective Stop loss order, is no more than 1% of your deposit funds.