The S&P 500 declined on Thursday following a 10.2% increase the previous day, marking the largest daily gain in over ten years. President Trump’s unexpected decision to pause heavy tariffs for 90 days revitalised market optimism, despite ongoing concerns about increased tariffs on Chinese imports, now at 125%.
The evolving trade situation could significantly impact global markets. Positive outcomes could lead to a trade deal, boosting stock prices, while further escalation may dampen market sentiment.
Daily Market Outlook
Daily studies show slight improvement, but the overall outlook remains bearish, indicating persistent downside risks. A healthy correction requires maintaining levels above $5230, while a break below $5200 could renew downward pressure.
Resistance levels are at 5457, 5496, 5532, and 5636, while support is at 5330, 5267, 5230, and 5200.
Thursday’s dip in the S&P 500, following a sharp rally that propelled prices by over ten percent the day before, underscores how sensitive broad equity indices remain to sudden shifts in policy. This particular swing in sentiment was rooted in Trump’s tariff freeze, which momentarily calmed market anxieties and fuelled buy-side enthusiasm. The sharp rebound, however, was short-lived. The rapid cooling, out of tandem with such a massive single-day climb, rings familiar to those managing short-dated risk exposures.
Looking at the broader picture, participants are trying to position themselves ahead of any breakthroughs—or stumbling blocks—in upcoming trade discussions. The imposition of higher Chinese import duties, now standing at 125%, remains a pressure point. These levels, heavy-handed as they are, feed into pricing models not only of multinational equities but also into volatility surfaces and implied curves, particularly in index options and structured products.
Technical Analysis and Trading Strategy
Technical breakdowns suggest that although there was an intraday improvement in broader trend indicators, negative bias remains intact. The prevailing bearish skew isn’t something to disregard. For a short-term rebound to hold water, price action would need to consolidate above that $5230 marker. This area acts as a potential stability zone. It’s the sort of level we use as a holding pattern—if respected, it allows risk to be bid without overcommitting to a high-conviction long direction. A clean failure below $5200, however, reintroduces measurable downside—likely dragging correlated assets lower and steepening hedging demand.
With resistance resting across a tight band—5457 and 5496 acting as nearby hurdles, and 5532 and 5636 further up—we’d advise staying tactical rather than directional. The width of those levels gives some breathing room for straddles or short gamma trades, but there’s not enough upside momentum currently to justify directional delta exposure unless those levels get taken out with conviction. Protective buying near support, specifically around 5267 to 5230, has made sense in recent sessions, but we’d watch volume profiles carefully. They’re not confirming strength yet.
The recent pricing behaviour is also a reminder of how binary trade headlines can impact implied volatilities. Gamma remains underpriced in a few pockets considering these swings. We’d explore near-the-money call spreads with defined max loss, especially if spot holds above 5230. Conversely, breach of 5200 opens up clean downside for put spreads, and we’re already seeing some participation come into downside strikes for the next quarterly expiry.
The last 48 hours have exposed the fragility baked into current positioning. Short-term options are now being repriced to reflect event risk, and the term structure has begun to steepen again. This implies some return of risk premia, suggesting broader caution. It’s a time to remain nimble, using defined-risk strategies rather than outright directional bets. The scope for further movement remains wide open.
