Watch out—the current rebound could be a bull trap.US 500CAPITALCOM:US500KrisadaYoonaisilWatch out—the current rebound could be a bull trap. Technical analysis 1. US500 rebounded from the EMA50, with the price forming higher swings, and the multi-period EMAs signal an uptrend. 2. However, price has formed Bearish Divergence with RSI twice already (rarely does it occur more than three times), so this rebound may not be sustainable. 3. In terms of Elliott Wave, this rally might be the final sub-wave before a major correction—potentially an Ending Diagonal, which tends to be a ZigZag structure and often finishes with a throw-over before reversing. 4. If the index holds above 6770 and can make a new high, the upside may be limited, with resistance at the ascending trendline around 7000—near the 161.8% Fibonacci retracement—before a significant pullback begins. 5. Alternatively, if US500 fails to make a new high, it may correct toward 6510 as the first support. Fundamental Analysis 6. S&P 500 valuations look extended, trading around 28–30x P/E versus a 17–25x long-run average range, while P/S near ~3.3–3.4x sits close to record highs—both materially above historical norms. 7. Inflation remains above target as core CPI is ~3% and sticky, leading to expectations that the Fed may not cut interest rates that much, which might not support risk assets as initially anticipated. 8. Berkshire Hathaway's record cash holdings reflect Warren Buffett's increased caution. He views the current market as expensive or uncertain, thus pausing major investments. This stance aligns with the Buffett Indicator surging to 217%-223%, a level he previously warned was "playing with fire," implying the market is significantly overvalued relative to the economy. Analysis by: Krisada Yoonaisil, Financial Markets Strategist at Exness