Key Trendline Break Watch
Derivative traders should be watching the 7150 level on the SPX, which represents the current key trendline. A definitive break and close below this level would provide the bearish confirmation we are looking for. This would signal that the C-wave down has likely begun. For the coming weeks, this suggests a strategy of buying out-of-the-money put options with late-April expirations. Specifically, the 7000 and 6950 strike prices offer an attractive risk-reward profile for a potential sharp decline. Selling call credit spreads above the recent highs of 7280 could also be an effective way to generate income while maintaining a bearish bias. The CBOE Volatility Index (VIX) has been slowly climbing, recently closing at 19.2, up from a low of 16 just three weeks ago. This is still modest compared to the spikes above 27 we saw during the 2025 downturn, indicating that option premiums for protection are not yet excessively expensive. A move in the VIX toward 22 would add conviction to the bearish outlook. If the trendline at 7150 breaks, our initial target would be in the 6980 area, which aligns with key support levels from the fourth quarter of 2025. This move would mirror the magnitude of the drop we successfully forecasted last year. Traders should consider setting profit targets ahead of this level.Downside Targets And Confirmation
Create your live VT Markets account and start trading now.
Start trading now – Click here to create your real VT Markets account
