Why I’m Eyeing the Short Side of the SP500

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I’m watching this setup closely. Here’s the trade structure, the logic driving it, how I’m thinking about risk, and the key indicators I’ll be following.

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SP500 Index

• Direction | Time Horizon | Stop Loss | Take Profit | Return:Risk :

  • Short | Short (< 3months) | - 4.7% | + 9.4% | 2:1

    
    

• Rationale:

  • The equity market is trading at all-time highs, raising the risk of a pullback.

  • Higher tariffs are likely to show up in economic data over the coming months, weighing on growth.

  • Geopolitical tensions remain unresolved, with the risk of escalation in the Middle East.

  • There is growing uncertainty around the macro growth outlook.

  • The Fed appears comfortable maintaining current rates, removing a potential tailwind for equities.

  • The “Big Beautiful Bill” appears to be a deficit-expanding policy that could push interest rates higher and raise fresh questions about the fiscal discipline of the U.S. government.

    
    

• Risk:

  • The market environment remains broadly risk-on.

  • Big Tech continues to outperform, and AI enthusiasm keeps fueling gains.

  • Trump’s proposed “Big Beautiful Bill” could provide short-term stimulus through tax cuts, boosting sentiment.

    
    

• Watch:

  • July 9: Potential end of the U.S.–EU tariff pause, outcome could shift sentiment.

  • July: Possible Congressional vote on the “Big Beautiful Bill”, any progress on expansion could drive equities higher.

  • Late July: Q2 earnings season, results from mega-cap tech (FAANG) could make or break the trend.

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Disclaimer