2 Key S&P 500 Levels That Could Tempt Profit Takers

The index has broken free of its recent trading range Todd Salamone Senior Vice President of Research Aug 10, 2026 at 8:47 AM SPX The S&P 500's recent breakout could still have legs “… the SPX remains in a range… The index has now been in a range between 7,300 and 7,530 for 49 of the past 53 trading days, with the upper and lower boundary of the range nearly covered in the last three trading days of last week. In other words, there is plenty of daily movement stirred by headlines, but still no directional movement looking back more than two months .” “The 8.5% year-to-date return for the SPX is the sweet spot for August. The month has been especially strong when the index has gained between 5% and 13% through the end of July. In those years, August averaged a return of 1.78%, with positive returns 77% of the time … when drilling down to the SPX’s year-to-date performance going into August, the odds shift in favor of the bulls. This is something to keep on your radar, especially if the focus in the media is heavily biased toward negative seasonality. Such sentiment could create a positive surprise for those positioned for an advance .” - Monday Morning Outlook, August 3, 2026 Finally! The S&P 500 Index (SPX – 7,757.64) broke out above the 7,300–7,530 stranglehold to its first all-time closing high in eight weeks last week. Some may have been caught off guard by the breakout, as it occurred in the first week of August, a month viewed by most as weak historically. As noted in last week’s report and excerpted from our July 29 “Indicator of the Week” column, even though August is weak in many instances, the SPX’s year-to-date price action heading into the month suggested otherwise from a historical perspective. If the first week of August is indicative of how the rest of August plays out, there will be many caught flat-footed betting on negative August seasonality. Moreover, the bears seemingly had a few things working in their favor last week, such as a weaker-than-expected employment number on Friday amid lingering fears of inflation. Plus, a negative reaction to a bigger-than-expected capital expenditure forecast by Elon Musk’s Space Exploration Technologies (SPCX) could have easily fanned another wave of panic in the AI trade. Additionally, this was one day prior to a lock-up period ending. Instead, semiconductor stocks rallied, as investors looked past the Situational Awareness fallout from the week prior and placed hopes on a deal that would clear a path through the Strait of Hormuz for smoother shipping of oil. By week’s end, the SPX easily closed above the 7,530 level that is 10% above last year’s close and had capped price action since mid-May. The index also closed above two other key levels that I have identified in the past that could tempt profit takers: 7,613 – 20% above the March low, and 7,700-century mark – 10% above the February high … buyers of the mid-April breakout above the late-January high may look to take profits in this area. “… with the longer-term technical backdrop still in favor of the bulls, and a history of equity option buyers wrongly positioned ahead of major directional moves, the current shift in sentiment toward caution could ultimately be rewarding for bulls in the coming weeks or months .” - Monday Morning Outlook, August 3, 2026 In last week’s commentary, I had noted how sentiment, as measured by the action of equity option buyers on SPX component stocks, had shifted to one of caution as the SPX bounced in a narrow range. My takeaway was this shift in sentiment could b...