The S&P 500 Index faces a crucial technical battle! Bulls and bears fiercely compete around the 7,500-point level, while market breadth indicators signal caution.

According to information from Zhihu Finance APP, after two consecutive days of sharp volatility, bulls and bears in the US stock market are once again fighting for the critical technical level of the S&P 500 Index (SPY). Meanwhile, a market breadth indicator for volatility—which is receiving increasing market attention—shows that the market still needs to be wary of further correction risks.

Data shows that on Friday, options traders and market makers were actively buying on dips near 7500 points of the S&P 500 Index, but when the index rebounded above this level, they quickly chose to sell. Position data from SpotGamma and Barchart indicate that 7500 points have become a major battleground in the current market.

According to Barchart statistics, the open interest for SPY ETF call and put options with a strike price of 750 dollars is the largest, meaning a large number of options positions have accumulated at this point. Around $745, both SpotGamma and Barchart believe that market maker hedging activity will shift from a previous pattern that helped stabilize the market to a “negative gamma” mode. Once this level is breached, market makers may be forced to sell into the decline rather than buy on dips, amplifying market volatility and increasing the risk of the index falling further.

Brent Kochuba, founder of SpotGamma, stated that if the S&P 500 Index drops below 7,450 points, the market could face a larger decline. He also suggested that selling short-term options with strike prices near 7,520 points on the S&P 500 Index has some appeal.

In addition to factors in the options market, divergence in performance among US stock market sectors is also a key reason for the index’s continued recent turbulence. Artificial intelligence technology stocks remain strong, while some traditional industries appear relatively weak, resulting in the broader market’s trend being long dependent on a small number of large-cap stocks.

However, the CBOE one-month implied correlation index—which reflects market consensus—has recently seen a clear rebound. This index measures the synchronicity of the top 50 S&P 500 Index constituents’ performance over the coming month; the higher the value, the more individual stocks tend to move together.

Data shows this index fell to a historical low of 3.3 on July 10, reflecting the market’s heavy reliance on a few leading AI stocks to drive gains. After the Federal Reserve meeting’s market adjustment and subsequent rebound, the index rose to 12 this week, indicating that more sectors are starting to participate in market movement and market breadth has improved.

It’s worth noting that, during Wednesday’s S&P 500 Index decline, only one constituent stock marked a 52-week low, further reflecting that the overall market selling pressure has not yet fully spread.

However, analysts point out that, although the implied correlation index has rebounded, it remains lower than levels seen during the last two market adjustments. In June this year, the index briefly rose to 20 and even reached 45 in April, after which the market gradually bottomed out. Therefore, despite the improvement in market breadth, the current technical picture is still at a critical stage, and future trends will depend on whether the S&P 500 Index can hold the crucial support near 7,450 points.