Selling SPX ahead of Alphabet and Tesla earnings reports

On July 21, 2025, the S&P 500 (SPX) index opened at 6,311.3 points. Market dynamics have been influenced primarily by expectations for reports from major technology companies, including Alphabet and Tesla, which are to be released this week. Investors are cautiously optimistic given the strong results from the previous quarter. According to FactSet, 86% of S&P 500 companies that have reported second-quarter results have exceeded analysts' expectations. However, the market's reaction to this has been mixed.

Trump's trade policy remains a key source of instability. On August 1, Commerce Secretary Howard Lutnick confirmed the deadline for imposing new tariffs on trading partners, but left open the possibility for negotiations. The market has already partially factored in these risks, as evidenced by the growth of technology and utility sectors, which rely on domestic demand. Meanwhile, energy and materials sectors remain under pressure due to the threat of rising costs.

Consumer sentiment in the US rose to a five-month high while inflation expectations declined, reinforcing confidence in the resilience of consumer demand. Nevertheless, the Federal Reserve remains neutral. Adriana Kugler emphasized the need to maintain current interest rates, avoiding both easing and tightening policies. This reduces the likelihood of sharp market fluctuations, but it also increases attention to corporate reports.

The results of Verizon, Coca-Cola, and, most importantly, Alphabet and Tesla, which are to be published on Wednesday, will be critical in determining future dynamics. Alphabet is expected to report growth in advertising revenue and increased investment in AI. Tesla, on the other hand, may face questions about margins and the impact of canceled electric vehicle incentives. While positive company results are already factored into current prices, failure to meet forecasts could trigger an immediate correction.

After a prolonged uptrend, the market is seeing a corrective movement, which indicates a possible decline in prices in the near future. The stochastic oscillator on the daily chart is near the overbought zone, confirming the likelihood of a reversal and correction. Additionally, the closing price of the last few days has differed slightly from the opening price, suggesting a decline in buying pressure. Overall, technical indicators point to a potential correction.

Current recommendation:

As part of the short-term strategy, sell at the current price. Take profit — 6,200.0. Stop loss — 6,380.0.