The S&P 500 is selling off, and traders are now eyeing a key 'risk pivot' level. On Thursday, sellers continued to put downward pressure in the S&P 500 futures market, and the index has moved below its 50-day moving average.
The index broke out of a steep rising channel from the 7.410 zone and dropped sharply through horizontal support at 7.440–7.445. That zone previously served as solid support.
Diverging Views on the Selloff
Opinions are mixed on what comes next. Some analysts point to signs of a bounce, noting the potential formation of a bottom near the 7.400–7.410 support zone, which followed a sharp decline through the 7.440–7.460 supply zone. They see this as possibly the first signal that buying pressure is returning.
Others, however, see lower highs and persistent selling pressure, arguing that the index is forming a series of lower highs and that selling pressure is still in control. This divergence underscores the uncertainty in the market.
Key Levels and Technical Signals
The US S&P 500 Index recently tested its June high of $7,620.90 before showing significant rejection above $7,550 resistance. The 14-day RSI stands at 35.023, classified as a Sell signal. For traders with a bearish bias, profit targets are set at $7,350, $7,300, and $7,250, with a stop-loss at $7,500. The $7,250 level represents a confluence of weekly support, oversold reversal potential, and a psychological round number.
A key level to watch is 7473. Yesterday's breakdown below this level keeps the higher-timeframe trend bearish. Rejection at 7473 could lead to short continuation, while acceptance above 7473 would weaken the bearish thesis. The outcome remains uncertain.
Options market signals also reflect the tension. The SPX put/call ratio has climbed to 1.10, and the SPX hedging pressure is easing as the put/call ratio slips below the gamma flip. Brent Kochuba, founder of SpotGamma, noted that while the degree of positive gamma in the market has lessened, there is still a 'fairly light amount of positive gamma' through to the 7,300 level. He added that the S&P 500 has fallen below a 'risk pivot' and that he'd be adding to short-dated, cheap, out-of-the-money put 'flies' with bearish directional bias.
Market Context
The selloff comes amid a backdrop of rising oil prices, heavy AI capex spending, and the risk of rate hikes. The US 10-year Treasury yield has touched 4.7%, the highest since January 2025, and the 2-year yield stands at 4.353%. The US Dollar Index (DXY) is at 101.11. Brent crude oil is up 7.00% to $100.69/barrel, and WTI crude is up 6.00% to $92.19. Geopolitical risks, including Middle East tensions and threats to the Strait of Hormuz, are also present.
The yield on the 10-year Treasury has touched 4.7%, while the 2-year yield stands at 4.353%. The Federal Reserve funds rate is at 3.63%. According to CME FedWatch, there is a 33%+ chance of a rate hike at the July 2026 meeting and 78%+ for September. Separately, market pricing shows >80% probability of a Fed rate hike at the September meeting, up from 52% one week ago.
The S&P 500's top 10 holdings carry a weight of 38% of the total index, and include Nvidia, Apple, Alphabet, Microsoft, Amazon, Broadcom, Meta Platforms, Micron Technology, Tesla, and Eli Lilly. Recent earnings have been mixed, with margin pressure from higher rates.
Options traders are bracing for wild swings in Apple, Meta, and Microsoft. The biggest options positions were concentrated around the 7,500 level in the S&P 500, but the flipping point for gamma was at 7,500. If the State Street SPDR S&P 500 ETF Trust (SPY) falls below 740, that would heighten the risk of a big sell-off.