Bull trap? It's 'make or break' time for U.S. soft landing case, strategist says

The S&P 500 is facing a key test level as the consensus view of a soft landing for the U.S. economy reaches a "make or break" point, according to one strategist.

Ron William, chief investment officer at RW Advisory, told CNBC's "Squawk Box Europe" the 5,200 mark will "decide whether this bounce-back holds or whether we break down lower."

U.S. stocks have whipsawed since last Friday, with a sharp sell-off followed by a bounce-back on Thursday. This led the S&P 500 to its strongest session since 2022, leaving it around the 5,310 level.

Two of the biggest drivers of the volatility have been Japanese monetary policy, and uncertainty about the health of the U.S. economy leading to questions of whether a recession is in the cards — with investors first spooked and then reassured by two sets of labor market data.

"Strategically, a top is in, but that will likely play out for the remainder of the year into 2025. That's our base case at RW Advisory," William said.

"Our thesis has been a behavioral inflection point since the start of the year, which is now reversed. But essentially what that means is a bull trap squeeze, where there's a lot of leveraged, bullish views on [the] back of a consensus soft landing view, which ultimately is now make or break."

"Certainly we could get an in excess of 10% correction into the 15% mark or more," he said, when referring to 5,200 as the key level to watch.

William described a bull trap as a selling point in which bullish consensus is proven wrong. In broad terms it can refer to a situation in which investors suffer losses on long positions after acting on a buy signal.

"[A bull trap] can be quite dramatic, and that's certainly what we were looking for over the last tactical period, because the