Investors are grappling with a complex mix of market signals, leading to increased put buying and a bearish sentiment in the S&P 500. The significant decline in Nvidia's stock, which has dropped around 16%, is adding psychological pressure on the broader index. Systematic strategies and ETFs are contributing to the selling pressure, potentially exacerbating the downward momentum. Despite these challenges, the market shows signs of resilience, with the 6,000 level on the S&P 500 emerging as a critical battleground due to substantial open interest and neutral gamma effects. This stabilization is further supported by the historically low correlation of implied volatility across S&P 500 stocks, suggesting that the current selloff is primarily an AI risk-off event rather than a broad market downturn.
The SPDR Portfolio S&P 500 Growth ETF (SPYG) experienced a notable decline, dropping 4.06% to $88.28 at 1:00 PM on Monday, January 27.