As you can see on the following daily chart of the S&P 500, the index was able to rise above the highs from December and January last week. However, there can be no talk of a sustained breakout and the S&P 500 closed below the resistance area again on Friday and was sold off amid increased volume. The breakout thus appears to have failed for the time being, which increases the likelihood that we can expect some headwinds in the coming days and weeks.<\/p>\n\n\n\n However, the long-term upward trend is fully intact and the S&P 500 has some important technical support on the downside. The long-term uptrend line (red) runs at around 5875 points. At the same time, a horizontal support zone is located here. The daily EMA 100 (blue) and the daily EMA 200 (red) could also provide technical support.<\/p>\n\n\n\n Last week saw a clear sector rotation in the S&P 500. The defensive sectors all made gains:<\/p>\n\n\n\n The offensive sectors, on the other hand, suffered losses:<\/p>\n\n\n\n Such a clear sector rotation is a sign that investors are withdrawing capital from risky stocks and investing more in defensive stocks with less risk. Such risk aversion is usually accompanied by falling share prices. However, this only affects the very short-term picture and could be a sign that further weakness is to be expected in the short term in the coming days, or at least until risk appetite returns.\u00a0<\/p>\n\n\n\n As far as the long-term picture is concerned, there is currently no clear warning signal. Looking at the last 60 trading days (around 3 months), we can see that the offensive sector Communication Services (XLC) has clearly outperformed. By contrast, the other offensive sectors (XLY and XLK) have performed similarly to the S&P 500. The picture is also mixed in the defensive sectors: while Utilities (XLU) is showing relative weakness, the Health Care sector (XLV) has performed somewhat more strongly and Consumer Staples (XLP) has performed in line with the S&P 500.<\/p>\n\n\n\n As no clear defensive sector rotation can (yet) be observed, this suggests that we are currently only seeing a correction and that there is potential for a long entry once the correction is over.<\/p>\n\n\n\n If, on the other hand, the sector rotation - out of risk and into safety - continues in the coming weeks, this would be a clear warning signal that should not be underestimated. Almost every trend reversal on the stock market is preceded by a clearly recognizable sector rotation.<\/p>\n\n\n\n However, the current developments fit very well into the seasonal picture. The following chart shows the seasonal trend of the S&P 500 for various time periods. It can be clearly seen that seasonal downward movements frequently occur in January and February. March, on the other hand, is an important local low in the seasonal trend, which is often followed by price rises.<\/p>\n\n\n\n The falling share prices on Friday were accompanied by a significant rise in the VIX. The volatility index peaked at just under 20 points and closed at 18.21 points.<\/p>\n\n\n\n The increased volatility makes selling options attractive. Based on the current analysis, a neutral strategy such as an Iron Condor could be an option. Call spreads are sold on the upside and put spreads are sold on the downside. The strategy generates a profit as long as there is no very clear and rapid movement in one direction or the other, or as long as the S&P 500 does not trade significantly above the level of the calls sold or significantly below the level of the puts sold on the expiry date.<\/p>\n\n\n\n![\"Line](\"https:\/\/www.captrader.com\/wp-content\/uploads\/2025\/02\/2025-02-24SP-500-Tageschart-1024x611.png\")
<\/figcaption><\/figure>\n\n\n\nOffensive sectors weak, defensive sectors strong<\/strong><\/h2>\n\n\n\n
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![\"A](\"https:\/\/www.captrader.com\/wp-content\/uploads\/2025\/02\/2025-02-24-1-Week-Performance-Marktsektoren-1024x325.png\")
![\"Bar](\"https:\/\/www.captrader.com\/wp-content\/uploads\/2025\/02\/2025-02-24-Relative-Performance-der-Sektoren-im-SP-500-1024x374.png\")
Seasonal low in March<\/strong><\/h2>\n\n\n\n
![\"Automatically](\"https:\/\/www.captrader.com\/wp-content\/uploads\/2024\/12\/word-image-57067-4-1024x546.png\")
<\/figure>\n\n\n\nRise in the VIX<\/strong><\/h2>\n\n\n\n
![\"Diagram](\"https:\/\/www.captrader.com\/wp-content\/uploads\/2025\/02\/2025-02-24-VIX-1024x446.png\")