while the sp 500 has been rising steadily since the end of march it’s fast approaching 4200 which has been a resistance level it’s struggled to break out of for the better part of last year as a result many traders are closely watching market indicators for signs of whether a breakout could happen or if the index will once again slide back down for many the latter scenario seems more likely here are some of the bearish assumptions traders are prepping for in the upcoming months optimism was high that q1 financial results releasing in april and may would be strong for many sectors especially tech but so far expectations seem to have been unrealistically high as earnings released so far have barely nudged the index up if earnings reports from the rest of the tech sector underperform the weight of their earnings disappointments could pull the entire index down since tech stocks currently make up almost 25 of the securities in the index even if tech manages to meet expectations the lift might not be enough to offset the overall earnings decline anticipated for q1 2023 despite somewhat slowed inflation analysts correctly anticipated another 25 basis point hike in may while inflation slowed slightly in march and is forecasted to continue decelerating through the year analysts don’t expect it to approach the 2 target the federal reserve is looking for until at least the end of 2024 with little hope that inflation will slow enough for rates to come back down traders may be anticipating a rate hike pause if not another hike may trigger another stock market pullback as investors flee equity markets in favor of money market funds according to bloomberg data in march the same month the federal reserve raised interest rates to 475500 investors were net sellers with approximately 41 billion flowing out of stocks while a whopping 363 billion poured into money market funds while that was partially fueled by the fallout from the banking sector a disappointing earnings season occurring alongside this next anticipated hike could fuel a similar crisis of confidence in the stock market market indicators point to possible recession on the horizon inflation might be cooling but economists are far from optimistic about the health of the us economy in march the conference board’s leading economic index lei fell 121 dipping to its lowest level since 2020 the lei is composed of various economic indicators that are used to forecast the future health of the economy including consumer confidence unemployment claims new manufacturer orders and interest rate spread in the last report nearly every indicator in the index was down which the board said suggests a recession could start as soon as mid2023 if those forecasts prove true the sp 500 may very well take a beating historically the index declines 315 on average during a recessionary period 2 it may not plummet that sharply all at once as it did in early 2020 but traders would likely see a steady decline potentially breaking below its 3850 support level with market conditions appearing to not look strong enough to indicate a recovery just yet the sp 500 is dangerously close to its longheld 4200 resistance level for some traders that means it might be time to start planning bearish trades to do that consider using direxion’s daily sp 500 bear 1x shares spdn the exchangetraded fund etf seeks daily investment results before fees and expenses of 100 of the inverse or opposite of the performance of the sp 500® index there is no guarantee the fund will meet its stated investment objective the index is made up of the top 500 largecap stocks in the us market and the current top ten holdings in the index include spdn is built for shortterm trading so it’s important to use spdn with a welltested strategy and avoid holding it for periods longer than a day when used carefully however direxion believes it may be a useful tool for seeking yield or potentially hedging a portfolio in a market downturn this post 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