The recent surge of the U.Sstock market has captivated the attention of investors globally, particularly highlighted by Nvidia’s astonishing stock performanceOn February 22nd, following its impressive earnings report, Nvidia's market capitalization surpassed $2 trillion for the first time, making it the leading chip manufacturer in the global marketThis unprecedented leap contributed to a rally in major stock indices, pushing the S&P 500 to historic highsThe index was seen flirting with the 5,100 mark, while the Nasdaq 100 soared to nearly 18,000, ultimately closing at 18,043.85 on February 29.

However, amidst the excitement, there is a note of caution in the marketAnalysts highlighted a consolidation phase following the dramatic upswing, suggesting that major tech stocks might require careful scrutiny

Despite some investment banks raising their projections for the S&P 500 to an ambitious 5,200 target, the charts indicate that the “Magnificent Seven,” the dominant tech giants, warrant a more measured approach.

Investors take profits as markets stabilize.

The day after Nvidia’s financial disclosures turned heads, with its stock experiencing a jaw-dropping single-day increase that added $277 billion to its market valueThis moment not only set a record for the largest single-day valuation gain in history but also eclipsed Meta’s previous record of $197 billionThe aftermath, however, led to investor skepticism about the durability of the technology-driven rally and its potential spillover effects into other sectors.

With robust economic data indicating ongoing strength in the United States’ economy, the diminishing expectations of a Federal Reserve interest rate cut raised questions about what this meant for stock market prospects

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Many investors faced a dilemma: should they continue to capitalize on minor declines, or start seeking short opportunities if bearish signals emerged?

As the earnings season began winding down, the likelihood of an early interest rate cut drastically reduced, with indications now pushing the timeline to June for any potential rate adjustmentsDespite the bearish climate, stock market benchmarks defied expectations and reached record heights, forcing even the most optimistic investors to consider rollbacks, even if modest.

On February 23, the market’s momentum waned, possibly due to profit-taking by investors who were acutely aware of the risks of corrections at these elevated levelsThe price action of major tech stocks showed that Friday’s trading warranted a cautious approach in the days that followed

Nvidia’s trading volume surged as shareholders sought to lock in profits, and its decline raised concerns about potential profit-taking pressures that could extend to broader U.Sindices.

Tesla, too, rested near lows within a bearish flag pattern, and falling below trendline support could trigger more technical selling in the days to comeMeta's attempts to break resistant levels between $485-$486 have been met with challenges, and it too closed below this crucial price point last Friday, signaling a possible correction despite the prevailing bullish sentimentMicrosoft formed a bearish engulfing line on its daily chart, hinting at potential retracement toward $400 as it might need to escape the "oversold" territory before attempting another move upward.

A healthy correction emerges in the U.S

markets.

The Nasdaq’s performance showed signs of fatigue, creating a “inverted hammer” on the daily chart, which suggests a potential slowdown in the rallyInvestors should certainly adopt caution moving forward, though this does not necessarily signify that the market has peakedFor bears to gain confidence, they need to witness a series of lower lows developing beneath the lows of last week at 17,315, especially with the critical support level at 17,660.

For bulls aiming to sustain the upward trend and propel the Nasdaq higher, defending this level is essential this weekA breakdown below 17,315 could lead to further drops to the December high at 16,970, possibly followed by earlier peaks seen in November 2011 at 16,769.

I previously anticipated that the U.S