Introduction
The S&P 500 is at an important level now because if the bulls are strong enough to hold above 7657 it is a good chance that we see a move higher once more to test the new ATH which made made on the 13th of August. The pullback from there is only 2.28% which is not nearly enough to warrant a possible reversal. The reason we are saying this level is so important is because if it does break to the downside, the next area of support is at $7,500.
The Rate Story, in Context
- The Treasury rally faded. Long yields fell on August 19 after the buyback announcement, then reversed the following session, and major indexes dropped more than 1% as that support disappeared.
- The July minutes were read as hawkish. Officials flagged ongoing inflation concerns, which sits awkwardly against subsequent data that has pushed September hold expectations to roughly 65%. The market is being pulled in two directions on the policy path.
- Valuation leaves less cushion than usual. FactSet has analysts looking for 29.1% S&P 500 earnings growth in 2026, with the forward P/E near 19.6 against a ten-year average of 18.9 — defensible while earnings deliver, but a smaller margin for error if rates keep climbing.
The bigger picture: Fed Chair Kevin Warsh delivers his first Jackson Hole keynote on August 28, and Nvidia reports on August 26. Both land next week. This week’s weakness looks a lot like positioning ahead of two events that could reprice the second half of the year.
Possible Trades
Breakdown continuation
- Entry trigger: daily close below 7,661.25
- Stop: above 7,690.59
- Target: 7,575–7,600 initial, 7,500 extended
Reclaim
- Entry trigger: daily close back above 7,733 clearing the confluence
- Stop: below 7,661.25
- Target: 7,800
Trading futures involves substantial risk of loss and is not suitable for all investors. Past performance is not indicative of future results. This analysis is for informational and educational purposes only and does not constitute financial advice. Always conduct your own due diligence and consult with a licensed financial advisor before making any trading decisions.
