S&P 500 bears circling 6700

• Brent crude tops $100 as Hormuz tensions escalate
• Fed 2026 rate cut expectations collapse to ~25bp
• Downside risk building for S&P 500 near 6700

We may have seen a late bounce in US equities on Wednesday, but the deteriorating macro and geopolitical backdrop suggests it may struggle to hold.

The Strait of Hormuz increasingly resembles a minefield, both literally and figuratively. Brent crude has pushed above $100 a barrel as risks to energy supply escalate, while expectations for Fed rate cuts have more than halved in a little over a week, falling to around 25bp for the year. Hardly the kind of environment that typically provides strong support for equities.

Source: TradingView

Our S&P 500 contract looks heavy, approaching the 6700 level where it has done ample work either side of in the past. It’s one of those messy levels you can’t fully trust but can’t ignore either. The price often trades straight through it like it’s not there, yet moves frequently fail to stick, resulting in sharp reversals.

With the contract now sitting close to the level, it creates fresh trade setups depending on how price interacts with it.

The coiling price action within a descending triangle warns of the potential for a downside break, as we saw earlier this week. The first attempt didn’t stick, but with RSI (14) trending lower beneath 50 and MACD confirming downside momentum is building, directional risks appear skewed lower unless we see a meaningful resolution to the Iran war that allows energy supplies to flow freely through the Strait of Hormuz again.

If we see a break beneath 6700, it may be worth waiting for a backtest and bounce to reinforce that sellers are waiting to trade the break. Use a shorter timeframe if necessary to track the interaction more closely.

If the price fails to reclaim the level, shorts could be considered with a tight stop above for protection, targeting the 200DMA initially, where the contract staged a sizeable bullish reversal earlier this week.

Other potential levels below include Monday’s low and 6508, the latter acting as both support and resistance during periods last year.

If 6700 holds, a lower probability setup would be to consider initiating longs with a tight stop below for protection, targeting the late February downtrend initially, and if that breaks sustainably, the 50DMA.