Last week was a challenging one for U.S. markets. Until Friday, they were weighed down by elevated valuations among AI-exposed companies and early signs of macroeconomic weakness, particularly in the labor market.
At one point on Friday, the S&P 500 was down 3% from the previous week’s close, while the Nasdaq had dropped as much as 4.75% compared with five sessions earlier. This was not entirely surprising, given the high concentration of Big Tech stocks in both indices, around 35% in the S&P 500 and an exceptional 65% in the Nasdaq.
China’s announcement on Wednesday to block exports of Nexperia chips, a Dutch company primarily focused on the automotive industry, reminded investors—already nervous about a potential “tech bubble”—of the fragility of the global high-tech supply chain.
On the macroeconomic front, the Challenger Job Cuts report showed a loss of 150,000 jobs in October, three times the expected figure and the weakest reading for that month since 2003.
However, on Friday, November 7, after the close of European markets, a sharp turnaround occurred. This rebound, driven mainly by technical factors, led to a 3.6% recovery as of November 12 (11:30 a.m. CET).
Technical Analysis
The S&P 500, currently trading around 6,872, formed a strong and clear hammer candlestick at last Friday’s close, signaling a potential reversal. The index recovered 1.65% intraday from its session lows.
During the sell-off, the S&P 500 briefly fell below its 50-day moving average, a critical support level in ongoing bull markets. This decline coincided almost exactly with a test of the upward channel that began in mid-May 2025, within which the index has traded since.
Several heavyweight components such as Microsoft ($MSFT) and Meta ($META) had already undergone sharp corrections. Semiconductor stocks, led by NVIDIA ($NVDA), AMD ($AMD), and Broadcom ($AVGO), also retreated from their recent highs. The VIX nearly reached 22, a level that has acted as clear resistance since at least 2023.
The rebound has been strong, and the prospect of a potential resolution to the U.S. government shutdown adds a positive element on the news front. The RSI (14) shows mild bearish divergence but has recovered from near-50 levels to around 60.60.
We are not far from all-time highs. The 6,885 zone represents initial resistance, while 6,920 marks the highest price the index has ever traded at. The 21-day and 50-day moving averages (at 6,784 and 6,697) remain positively sloped. The upper Bollinger Band stands near 6,944, and the top of the rising channel currently aligns around 6,980.
Despite the recovery, the market appears increasingly aware of stretched valuations. Caution is advised when considering new long positions after such a strong rally.
