Wall Street searches for a new equilibrium

SP500

Key zone: 6,800 - 6,900

Buy: 6,950 (after retesting the 6,850 level); target 7,100; StopLoss 6,900

Sell: 6,800(on strong negative fundamentals); target 6,650; StopLoss 6,850

The U.S. market has once again entered a zone of uncertainty. The S&P 500 index is testing a support level that has held for several months, and market participants are trying to assess how deep the current correction could become.

After the record weekly decline in November of last year, evaluating the downside potential below the 100-day moving average has become significantly more complicated. From a technical standpoint, the market is approaching a sensitive area, while fundamentally estimating the scale of a possible downward move is nearly impossible. At the moment, the MA(100) stands near 6,814 points, making this level an important short-term reference.

• One of the most likely explanations for the pressure on the index remains capital rotation: investors are gradually reducing positions in the overheated technology sector and reallocating funds into more defensive assets. At the same time, price action remains highly volatile — on Tuesday the market initially dropped sharply, then partially recovered losses and closed with a minimal gain.
• The market is currently forming a battle between bulls and bears within a relatively narrow range. The overall tone remains moderately negative, although large-scale selloffs have not yet materialized.
• The index fluctuates between 6,800 and just under 7,000 points, while active fund managers have reduced their equity exposure to the lowest levels since July, according to a survey by the National Association of Active Investment Managers.
• Index gains are being limited by weak performance among the largest issuers. The so-called “Magnificent Seven” are exerting noticeable pressure on the market: since the beginning of 2026, their shares have declined by about 7%, with double-digit losses posted by Amazon and Microsoft. These heavyweights continue to shape a potential market top and restrain further upside in the S&P 500.
• Analysts are also closely monitoring market breadth — the number of companies reaching new highs. This metric is traditionally viewed as an indicator of the sustainability of a bullish trend. According to the latest report from Roth Capital Partners, about 15% of companies in the Russell 3000 index have reached new highs, while only 8% have posted new lows, despite ongoing concerns surrounding the artificial intelligence sector.
• At the same time, a sharp increase in new highs may signal not only market strength but also potential momentum exhaustion. Last week, the New York Stock Exchange recorded 263 new 52-week highs — a record level. By comparison, in January, when the S&P 500 hit its all-time high, only 109 companies reached such levels. This divergence requires careful analysis, as it may indicate structural changes within the trend.

The overall picture remains mixed. The S&P 500 is balancing between technical support and signs of weakening leadership among large-cap stocks. The market has not yet transitioned into full-scale selling, but further direction will depend on whether breadth remains strong and whether the index can hold above key levels.

We should closely monitor developments and watch for new signals of potential downside, making corporate earnings analysis an essential procedure for all traders, regardless of the assets they trade.

At present, the 6,720-point area remains a significant technical support zone. It will serve as the key marker: if the level holds, the market may continue its rotation phase without breaking the broader structure. A decisive downside break would signal the end of the medium-term bullish cycle and a transition to a deeper correction.

So we act wisely and avoid unnecessary risks.

Profits to y’all!