Only 5930 level stands between S&P 500 and correction toward 5800

The S&P 500 hit fresh late-February highs last week but surrendered significant gains by Friday. The index dipped to the 5930 level, where bulls stepped in and are now attempting to revive the US stock market rally. However, the correction could still extend further, potentially dragging the S&P 500 down to 5800. Given current market conditions, a sustained rebound in American equities appears unlikely.

Evercore ISI strategists warn that renewed Middle East tensions further diminish prospects for US stock market gains this summer. Their analysis suggests recent geopolitical developments, combined with Donald Trump’s proposed tax bill and import tariffs, will delay the S&P 500’s next record high until at least 2026.

Michael Kantrowitz of Piper Sandler & Co. also highlights May’s inflation report released last week. While the data beat expectations, market participants largely shrugged it off. Kantrowitz argues that current stock prices already reflect all positive catalysts, but not potential downside surprises. Notably, institutional investors have been consistently selling rather than buying stocks over the past five weeks, according to Bank of America.

Bloomberg analysts identify a clear sign of weakening momentum in the US stock market through its leadership structure. While tech giants typically drive S&P 500 gains, June has seen traders pivot toward traditionally defensive sectors—real estate, utilities, and healthcare stocks. This rotation suggests investors are seeking shelter in haven assets amid anticipated market turbulence, a sentiment shift that bodes poorly for the broader index's upward trajectory.

The RSI indicator has turned downward from overbought territory, confirming a sell signal for the S&P 500. The nearest bearish targets are the 5930 and 5800 support levels.

Consider the following trading strategy:

Sell S&P 500 at the current price. Take profit 1 – 5930. Take profit 2 – 5800. Stop loss – 6070.