As geopolitical tensions in the Middle East gradually ease, market focus has shifted back to the trajectory of US equities. However, the latest report from a major investment bank's strategy team suggests that technical risks for US stocks may just be emerging. The institution noted that the S&P 500 Index is currently displaying multiple warning technical signals and is expected to enter an ABC three-wave correction pattern in the third quarter. Market trends in the coming months may involve sideways consolidation or even decline. In the most pessimistic scenario, the index could pull back by approximately 6%, dipping to around 6,850 points.

Despite a cautious short-term outlook, the bank emphasized that this resembles a technical correction within a bull market rather than the onset of a long-term bear market. The strategy team analysis suggests that as market pressure from tensions involving Iran fades, investors need to monitor the index's own trajectory. The S&P 500 is currently approaching a typical ABC correction structure, which usually manifests as the market completing a correction after three consecutive declines before resuming an upward trend. The possibility of the market evolving into a three-wave adjustment or even a double adjustment this summer is relatively high. The report specifically warned that if the index hits new record highs again and approaches 7,741 points, it could constitute a typical bull trap, and investors should remain vigilant.

Currently, at least three important technical indicators have simultaneously issued warning signals. First, market upward momentum is weakening. Although the index previously continued to hit new highs, the 14-day Relative Strength Index (RSI), which measures momentum, has fallen back to around 49, indicating that buying pressure is waning and there is a risk of reversal in the upward trend. Second, the TD Sequential technical indicator showed a red 13 signal on June 1, which usually means a long-lasting upward trend is entering an exhaustion phase, raising correction risks. Third, according to Elliott Wave Theory, the S&P 500 Index falling to around 7,334 points on June 10 is likely the starting point of the fourth wave adjustment. If this level is broken below in the future, it will further confirm that the market has entered a correction phase.

In terms of sector performance, the AI and chip sectors, which previously led gains, have recently shown obvious signs of profit-taking. The Nasdaq 100 Index fell approximately 4% cumulatively last week, with declines mainly concentrated in large semiconductor companies. Stocks such as Broadcom, Nvidia, and Intel accumulated declines between 7% to 10% within a week, indicating that investors are reducing risk exposure to AI-related stocks. This adjustment has exacerbated short-term market volatility and increased the possibility of entering a technical correction phase in the third quarter. Despite maintaining short-term caution, the institution has not changed its long-term bullish stance on US stocks. It is expected that after the third-quarter adjustment, market fundamentals will still support the stock market to regain strength and welcome a traditional year-end rally in the fourth quarter. Meanwhile, investors are advised to focus on whether the S&P 500 Index breaks below the key support level of 7,334 points and whether it rises again to around 7,741 points. If a trend of hitting a new high followed by a rapid decline appears, vigilance against the formation of a bull trap is needed, and positions should be managed appropriately.