The S&P 500 declined 5.97% on Friday, dropping below the 5,100 mark in response to a tariff announcement. This reduction pushed the index to its lowest levels since April 2024, with futures indicating an additional drop of 1.8%.
Last week, the S&P 500 fell by 9.08%, marking its worst performance since March 2020. The breach of support around 5,500 suggests a transition toward a more pronounced bear market.
Nasdaq 100 Decline
The Nasdaq 100 also suffered, closing 6.07% lower on Friday and down 9.77% over the week. Futures indicate further losses, with critical technical supports broken.
The VIX index surged above 60, indicating heightened market fear. This spike is typically associated with downturns, while a falling VIX suggests market calm.
Current S&P 500 futures are down approximately 1.8%, indicating ongoing selling pressure. Resistance is noted at 5,000-5,100, while support lies between 4,800-4,900.
The stock market is undergoing a severe sell-off linked to global trade tensions. Major indices have breached important technical levels, suggesting time will be needed for recovery. Further volatility and potential rebound attempts are anticipated today.
After Friday’s sharp fall, with the S&P 500 breaking well beneath the psychological 5,100 threshold, we’ve entered a technically strained phase. That 5.97% single-day drop, paired with a cumulative decline of over 9% last week, gives us a view into a rapid shift in positioning and expectations among institutional investors. Prices are pulling away from their recent trading ranges, and as these new levels settle in, we’re seeing futures act accordingly—pointing another 1.8% lower this morning.
The loss of footing around 5,500 wasn’t just a routine retracement. On the contrary, it pointed to a loss of accumulation strength on the way down, sending a stronger message that longer-term buyers have stepped back. This now leaves the index exposed to further downside risk, particularly with the nearest support zones closer to 4,800-4,900. These levels may offer a test for how much conviction remains among the more resilient holders. Certainly, if there’s an attempt at a sharp reversal, it’ll need to build from there.
The Nasdaq 100 isn’t faring much better. That 6.07% collapse to close out the week, and nearly double-digit erosion over five sessions, triggered multiple downside breaks across previous floors—especially in high-beta tech names. These aren’t just gaps; they’re vacuum zones where buyers evaporated and selling pressure found little in the way of counterbalance. In derivatives, this reflects not only fading momentum but shifts in the implied volatility curve that accompanied such a move.
Speaking of volatility, the VIX soaring past 60 is a reflection of sudden stress pricing. That’s not a general risk-off tone anymore—it’s full-fledged repricing of market risk. These levels haven’t been breached in ordinary corrective waves; they’re more often tied to broad de-risking or macro-concern events. Intraday spikes of this kind feed into an environment where gamma exposure from dealers compels exaggerated directional flows.
Ongoing Market Pressure
Now, when futures already open more than a percent in the red and hold beneath their nearest consolidation zones, that dynamic builds in two ways. First, there’s the mechanical re-hedging that happens ahead of the open. Second, there’s optionality flow—fast-moving order books pushing implied vols higher and diminishing spreads between strikes. For us, this outing beneath 5,000 has rapidly flipped the underlying short-term sentiment profile and pushed risk premiums wider than they’ve been in many months.
That said, just because levels are stretched and names are oversold, it doesn’t mean mean-reversion is the immediate trade. Timing the rebound here would mean distinguishing between exhaustion in selling and reactive short covering, which are not the same thing.
With the global trade backdrop pressuring core sectors—many of which act as key weights on index-based products—we anticipate further defensive posturing this week. Observing how volatility stabilises near these zones is part of the tactical setup we’re eyeing most closely. If the VIX begins to pull back while price remains firm, that could be the earliest route for premium sellers to tentatively return. Until then, keeping positions nimble and looking for asymmetric structures remains the preferred approach.
Amid all this, options traders should pay close attention to IV rank regimes as we move deeper into this leg. When vol premium widens and directional clarity remains elusive, gathering theta becomes materially more attractive—but only in defined-risk strategies. Longer-dated implieds are showing more slope than we’ve seen since mid-2022, which may provide a window for calendar or diagonal constructions favouring slower decay profiles.
Energy remains bid in relative terms, and that divergence can’t be ignored. Materials remain weaker. Watching for these cross-sector moves gives a better hint at where hedges are not just reactionary, but anticipatory. The sharper the divergence grows between SPX and NDX implied volatility, the more asymmetric the tail-hedge appetite becomes.
It’s a period where impulse trades can backfire quickly, especially with headline sensitivity at extremes. Look for resolution clarity, not just reaction spikes. Early-week price action should provide deeper data to evaluate whether liquidity gaps tighten—or widen still.
