Carter Worth highlights level of support for S&P 500 ETF as market sells off

The SPDR S&P 500 ETF (SPY) is currently experiencing a modest 3.16% decline from its recent all-time high of $639.85. Technical analysis identifies critical downside support levels for SPY, beginning at $631 (a 4.1% decline), with a mid-point at $593 (a 7.25% decline), extending to $575 (a 10.10% decline) as deeper support. Given the short duration of the current sell-off, further market weakness is anticipated, prompting a cautious outlook for investors in the coming days and weeks.

Analysis

The SPDR S&P 500 ETF (SPY) is undergoing a minor correction, having declined 3.16% from its recent all-time high of $639.85 over a two-day period. Technical analysis identifies a series of critical downside support levels that are expected to come into play. The initial support zone begins at approximately the $631 level, which corresponds to the pre-tariff sell-off high from February 19th and represents a 4.1% drawdown from the peak. The analysis suggests support is not a precise point but a zone, with prices likely to penetrate this level. A mid-point support is identified at the $593 level, a 7.25% decline, while more significant support is anticipated as far down as the $575 level, which would constitute a 10.10% correction. The prevailing view is that the current sell-off is in its early stages, with expectations of further downside in the immediate future.

Key Decisions for Investors

• Given the anticipation of further downside, investors should consider implementing protective measures for long equity portfolios, such as hedging or reducing broad market exposure via SPY.
• Monitor the key technical support zones at approximately $631, $593, and $575, as price action around these levels will be critical for gauging the severity of the sell-off and potential entry points.
• Traders looking to initiate new long positions should exercise caution against buying at the initial touch of support, as the analysis suggests prices will likely sink into these zones before finding a stable base.