S&P 500 at 7000 is a valuation test, not a liquidity problem

💡 DMK Insight

The S&P 500’s failure to break above 7000 signals underlying weakness in market sentiment. Despite a macro backdrop that typically favors risk-on assets, the index peaked at 6986 and couldn’t sustain momentum. This suggests that traders are hesitant, possibly due to concerns about over-leveraged positions or economic indicators that might not align with bullish expectations. If the index continues to struggle at this level, we could see a shift towards more defensive strategies, particularly in sectors that traditionally perform well during downturns. Watch for the 6900 support level; a break below could trigger further selling pressure. On the flip side, if the index manages to reclaim 7000 decisively, it might reignite bullish sentiment, but for now, the cautious approach seems warranted.