SPX Near All-Time Highs: Is the Deal Already Priced In?

My stance:

Considering that the market has surged to the upside over the last two weeks based on the likelihood that a deal will be reached, the logical positioning would be to stay long on SPX. The question, however, is at what point can we consider that the market is overbought? I think it makes perfect sense that SPX is trading at, and even above, the level it was trading at before the beginning of the war, despite the fact that Iran and USA have not reached a deal yet, because the market is expecting that a deal will be reached pretty soon (based on officials’ comments, Vance’s optimism, Trump posting that he was called by the right kind of people from Iran, reports that second-round negotiations could happen very soon, a potential ceasefire extension, etc.).

Scenario: ATH before a deal, buy the rumor and sell the fact:

At the time of writing, SPX is currently only $3 below its ATH. I believe that in a scenario where SPX makes a new ATH (and could even gravitate toward the upper end of the longer-term upward channel, [see daily chart below], which is roughly 2% above the current ATH) before an agreement is reached, we could see a classic buy-the-rumor, sell-the-fact reaction / profit-taking. What are my arguments?

1. The fact that SPX would already be trading above the current ATH would prove that the market has already priced in the deal (the announcement of a deal would not make that much of a difference, at least for SPX).
2. The current market optimism is very strong, and I see a lot of people wanting to go long, hoping to see a rally into year-end, just like in April last year. When a lot of people are extremely bullish or bearish, it often means that most of the move has already been made, and that the market may first need at least a small correction or consolidation before continuing higher or lower.
3. If we look at the put-to-call ratio, it has completely reversed since the beginning of the war and is now pretty low at 0.68. It is not sitting at a level that is sustainable (max 1–3 days). The last time we saw the put-to-call ratio this low was on May 15, 2025, at exactly 0.68, which led to a 3.88% pullback only three days later.

Personally, as fundamentals continue to point to the upside (because the more likely outcome continues to be a deal), I will not try to take any shorts on SPX. However, if the market pulls back not because of fundamental changes, but because it has become overstretched on the technical side, that could instead offer a better long opportunity.