S&P 500 Analysis: 7,540 in View Before the September Fed Meeting

Key Points

• The implied correlation closed at 8.34 on August 21, 2026, marking the 1.91st percentile of 5,191 sessions since 2006.
• The analyst predicts the S&P 500 will reach 7,540 by the Federal Open Market Committee (FOMC) meeting on September 16, with a potential drop to 7,380 if correlation aligns with its March average.
• The Cboe's volatility index has decreased from 48.97 to 37.97 since July 10, while correlation has surged by 142%, and the VIX has only moved ten basis points during this period.
• Three significant events are anticipated within this timeframe: NVIDIA's earnings report on August 26, Kevin Warsh's keynote at Jackson Hole on August 28, and the FOMC's projections on September 16.

Market Overview

The S&P 500 closed at 7,674.37 on August 21, down 1.60% from its record high set on August 13. The options market is indicating unusual pricing behavior, with single stocks exhibiting volatility at the 81st percentile of their historical range, while the index itself is at the 33rd percentile. This discrepancy is a focal point of the analysis.

Analysis Insights

The article delves into the reasons behind the current market dynamics, explaining how the volatility gap between single stocks and the index itself has contributed to the recent price movements. The author reflects on the accuracy of previous forecasts and discusses the implications of the upcoming events on market performance.