.SPX: 3 Distinctive Market Conditions
The last two times the Fed hiked in a midterm September: one crash, one bottom. Round three is in two weeks, here’s how to trade into the event 👇
$S&P 500(.SPX)$ closed at 7,631, its lowest level since August 4, after losing the 7,650-7,700 zone it defended for two weeks. Oil is surging on the Strait of Hormuz escalation, the 10-year is pressing 4.8%, and rate markets flipped to pricing a September hike. Jobs Friday, then FOMC mid-month. Three paths from here.
Scenario #1: The September Flush
Oil and yields don’t let up and the breakdown follows through. $SPX loses 7,600, bounces get sold, and the flush runs to 7,500 (roughly 4% off the highs) where the market finally bottoms out. If the midterm playbook holds, that’s the low of the year forming, not the start of a bear market.
Scenario #2: Failed Backtest Chop
$S&P 500(.SPX)$ stabilizes and rallies back toward 7,700 but the previous support acts as resistance and the bounce stalls. Market coils between 7,600-7,700 into the FOMC with a hike half-priced, chopping up both sides until the Fed picks the direction.
Scenario #3: De-escalation Rip
A Middle East de-escalation headline or a cool jobs print Friday and oil dumps, yields pull back hard. $SPX reclaims 7,700, every short from today’s breakdown is trapped, and the squeeze runs back to 7,816. New all-time highs into the “worst month of the year” as maximum pain.
Market Conditions
$S&P 500(.SPX)$ above 7,700 = Bullish (breakdown reclaimed)
$S&P 500(.SPX)$ between 7,600-7,700 = Neutral
$S&P 500(.SPX)$ under 7,600 = Bearish (opens 7,500)
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
