BofA Warns of Three-Wave Correction for S&P 500

BofA's warning of a three-wave correction could create short-term selling pressure on the S&P 500, which is technically in overbought territory. The RSI above 70 indicates the market is overheating and signals a potential pullback. Although the MACD remains above its signal line, there is a risk of weakening momentum. The 1.7% rise over the past 24 hours may be vulnerable to profit-taking following the warning. In the short term, the 20- and 50-day moving averages at the 7412-7413 levels could be tested.

GOOGL shares closed up 4.8% at $357.07, trading above both its 20-day and 50-day moving averages. While the RSI at 63 is not yet in overbought territory, the MACD above its signal line supports short-term momentum. However, BofA's warning of a three-wave correction for the S&P 500 could dampen overall market sentiment and limit upside in GOOGL. Despite strong technical indicators, a sideways trend may be expected in the near term due to the macro caution.

The NDX has entered overbought territory with an RSI of 71.7, which is typically interpreted as a signal for a short-term pullback. BofA's warning of a three-wave correction for the S&P 500 raises concerns about the sustainability of the rally in indices. Although the MACD being above its signal line supports momentum, overbought conditions and corporate warnings could trigger selling pressure. In the short term, the continuation of the uptrend appears challenging, but the decline is not expected to be severe.