The S&P 500 Index (SPX) is currently trading near the significant 6,500 level. The fundamental picture looks rather mixed. On the one hand, Donald Trump keeps talking that the Middle East crisis isn’t far from being over and the Strait of Hormuz issue is about to be resolved. On the flip side, inflation expectations have soared on troubling news, alongside Brent crude prices, which have once again climbed above $110 per barrel.
Given these circumstances, the upcoming US labor market report—due Friday—is turning heads. The consensus forecast is relatively conservative, projecting an increase of 56,000 jobs. If the figures come in above expectations, traders may brace for tighter monetary policy in the United States. This shift in market sentiment would, in turn, weigh on inflation- and rate-sensitive assets, such as the S&P 500.
From a technical perspective, the SPX chart paints a clearly bearish picture. The index failed to pierce through resistance at 6,610 and pulled back. If the current downtrend persists, quotes could soon test the 6,330 support level.
The ultimate recommendation is to sell SPX at current prices, targeting 6,330 within the next week or two. To mitigate the risk of adverse market movements, place a Stop Loss order slightly above resistance, or around 6,650.
