The final trading session before the Fourth of July holiday painted a technically fractured picture: the Dow Jones Industrial Average closed at a record 52,900.07, while the Nasdaq Composite dropped 0.8% as semiconductor stocks sold off sharply. The S&P 500 sat in between, essentially flat at 7,483.24.
A softer-than-expected June payrolls report eased rate-hike fears and fueled a rotation into industrials and consumer stocks, lifting the Dow. That same rotation punished the tech-heavy Nasdaq, where momentum-driven chip names faced profit-taking after a blistering first half.
The Elliott Wave Picture: Divergence Tells a Story
Elliott Wave analysts tracking the market from the March 2026 lows describe the Dow's strength and Nasdaq's weakness as two sides of a maturing cycle.
On the Nasdaq, the rally from the March low (~25,300 area) completed a textbook five-wave impulse, with wave ((v)) approaching resistance around 27,000. Negative RSI divergence at that level signals the index is due for a multi-wave corrective phase. Key support sits at 25,800–26,000; a break below would confirm the correction is underway and target deeper levels. Resistance is pegged at 27,000.
The S&P 500 presents a more ambiguous picture. Multiple analyses suggest the index is completing a fourth wave or working through a complex corrective structure, a bull flag consolidation following the sharp rally from March. The internal wave labels show an impulse that targeted 7,147 in wave ((iii)), a pullback to 7,046 in wave ((iv)), and an extended fifth wave toward 7,500. The open question is whether wave 4 is finished or has further work to do.
Key levels being watched on the S&P: support at 7,300–7,351 (near-term), then 7,200 and 7,000 (deeper). Resistance at 7,500–7,517, then 7,600, a break above which opens the door to 7,900.
BofA's ABC Correction Warning
Bank of America's technical strategy team, led by Paul Ciana, issued a note in late June warning of a three-wave (ABC) correction in the third quarter. The analysis flags a cluster of bearish signals: margin debt surges, narrowing breadth, and an Elliott Wave structure that suggests the index is topping out.
The worst-case scenario targets 6,850 on the S&P 500, a 6-7% drawdown from current levels. BofA also warns that any marginal new high toward 7,741 could prove to be a "bull trap" consistent with an expanding flat pattern. Investors were advised to maintain a defensive posture through September, with a potential Q4 recovery.
Semiconductor Sell-Off in Focus
The hard hit in chips was the week's dominant technical story. Micron Technology (MU) fell 5.49% to $975.56, a sharp corrective wave after a multi-hundred-percent YTD run. Key support lies at $953–960, with resistance at $985–995.
NVIDIA (NVDA) closed at $194.83, down 1.39%. The stock is testing critical support at $191–192, a level analysts describe as the last line of defense before a deeper correction toward $183. Resistance sits at $197–199. The broader semiconductor index (SOX) dropped roughly 5-6%, reflecting a sector-wide rotation out of AI winners that had surged roughly 80% in H1 2026.
AMD showed a more mixed picture, consolidating in a $518–$580 range with no clear directional bias. Technical analysts note limited overhead resistance, suggesting room to run if support holds and momentum builds.
The Bottom Line
The first week of July sets up a critical test for the market when trading resumes Monday. The combination of a Dow record, Nasdaq weakness, a BofA correction warning, and a semiconductor shakeout creates a technical setup the market has not faced since the March lows. The 7,480–7,500 zone on the S&P 500 is the pivot: a clean break above reasserts the bull case, a decisive failure validates the correction narrative.
