The S&P 500 is facing a challenging trading session as bearish sentiment takes hold, driven by increased put buying and a notable decline in Nvidia's stock, which has dropped significantly. This has added psychological pressure on the broader index, contributing to the selling pressure from systematic strategies and ETFs. Despite these headwinds, the market is showing some resilience, with the 6,000 level emerging as a critical point due to substantial open interest and neutral gamma effects that help stabilize prices. The current selloff appears to be an AI risk-off event rather than a broad market downturn, as indicated by the historically low correlation of implied volatility across S&P 500 stocks.
The ProShares UltraPro S&P 500 ETF (UPRO) has experienced a significant decline, dropping 5.83% to $92.14 as of 1:00 PM on Monday, January 27.