U.S. stocks are facing a "critical support level," testing the determination of the bulls. If it breaks below, a downward trend will be confirmed until "early next year."

U.S. stocks are facing a "critical support level," testing the determination of the bulls. If it breaks below, a downward trend will be confirmed until "early next year."

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The US stock market is at a critical technical crossroads, with the determination of the bulls facing a severe test.

According to ZF Trading Desk, JPMorgan’s latest technical strategy report released on November 14 indicates that multiple key US stock indices continue to be under pressure at their support levels. If these "defense lines" are breached, it will confirm the market has entered a downward trend, with the adjustment possibly lasting until early 2026.

Among them, the S&P 500 is currently testing its first support around 6700 points. If this level, the recent low of 6631, and the support zone low of 6525 are successively breached, a bearish trend reversal will be confirmed, with the downside target near 6150. Of all benchmark indices, the Russell 2000 exhibits the “most concerning” technical pattern, having already broken through key support and confirming a bearish trend reversal, opening the way for further correction.

S&P 500: Three Key Lines of Defense Face a Test

The report points out that as a market bellwether, the S&P 500 is facing a test from three layers of crucial support zones.

The first line of defense is the 50-day moving average and the channel trend line since May, currently near 6700. If this level is lost, the market will continue to test the second line of defense—the recent price low of 6631. The final key line of defense is the support zone low of 6525 from September to October.

Analyst Jason Hunter believes that only when all three lines of defense are breached can a downward trend reversal be confirmed. At that point, selling pressure may accelerate, and the index's potential bottom may be near 6150, which could become the market’s bottom before early 2026.

Russell 2000: The Most Concerning Technical Pattern

Of all US benchmark indices, the Russell 2000, which represents small caps, shows the “most concerning” technical pattern. The report highlights that last Thursday the index closed below the 2380-2390 support zone (from September to November), after previously failing to hold its bullish trend support and 50-day moving average.

This series of breakdowns puts the market in a very fragile position. The report believes that if it continues to close below these support zone lows, a bearish trend reversal will be confirmed, opening the door for a correction to the medium-term support range of 2214-2235. For bulls, recapturing both the 50-day moving average at 2449 and near-term chart pivot points at 2475-2485 is necessary to reestablish footing.

AI Leading Sectors Under Pressure, But Not Fully Broken Yet

This year’s market leaders—AI concept stocks—are also facing pressure. JPMorgan’s “AI/Data Center/Electrification Beneficiaries Index” in the report has broken short-term trend support but has not yet breached the critical technical support at 79.88-80.00, so a bearish trend reversal has not been confirmed.

However, once this key support is broken downward, the market will become fragile and could further weaken to the next support—the 73.90 gap from September 10 and the mid-term support near 70. The report predicts that if the index breaks down and corrects this quarter, the 70-73.90 region could become its bottom before early 2026.

Sector Rotation Signs: Capital Flows to Healthcare, But Materials Faces Resistance

With leading sectors like AI under pressure, signs of sector rotation have appeared in the market. The strong recent performance of the S&P 500 equal weight index is an example. However, this index also shows signs of fading momentum, with key technical support at the 7500 area.

The report points out that healthcare is a bright spot in the rotation, attracting some funds flowing out of former leading sectors. Its sector index has reached the 1778 target. But analysts suggest not to chase at current levels, and instead wait for consolidation to buy on dips.

Meanwhile, the materials sector also attracted some rotation funds, but its sector index rebound has brought it into the 555-563 resistance zone. If it cannot break through this zone, its fragile technical pattern will persist, and if it later breaks 540, it may further decline to the mid-term support of 511-518.

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