The SP500 holds 80% by value of the total US stock market. It holds 45% of the developed world’s stock value. It is the leading index to watch and analyze for understanding the larger moves of the global stock market.
The 4300 level was the 4 October 2021 pullback low. The SP500 went on to put in a new high. At the end of January, the SP500 tagged the 4300 multiple days with a low close of 4326. It then put in a weak bounce.
The 4300 level is the shoulder level of a potential Head & Shoulders pattern that represents a major market top. This level has been defended vigorously since it returned as seen on the chart above. A decisive decline below this level would set off much selling pressure.
Wall Street is counterparty to both bets on the market rising or falling. They have a sweet spot where their payouts on these insurance/speculative positions pay out the least. That sweet spot for tomorrow (Friday Options Expiration) is between 4350 and 4400.
The current consensus is the options market is not setting up for a large rally next week or a continuation of a bull market. By next Thursday we will see what the market is positioning for.
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