Although most markets are trading near all-time highs, Chris Vermeulen, chief market strategist at The Technical Traders, has stated that clear signs of exhaustion are emerging, with technical conditions pointing to a meaningful correction in the coming weeks.
Vermeulen noted that recent price action resembles past topping patterns, where strong rallies give way to sharp pullbacks, brief consolidation, and marginal new highs before momentum breaks down, he said in an interview with David Lin.
He added that upside strength has faded materially, increasing the risk of a sudden and aggressive decline.
A key concern is weakening leadership among large-cap technology stocks. In this line, the Magnificent 7, which have driven much of the gains in the S&P 500 and Nasdaq, are now moving sideways with increasingly bearish characteristics.
Vermeulen argued this loss of momentum undermines broader indices, particularly the Nasdaq, and signals waning investor enthusiasm for previously dominant themes.
He also warned that the rally in precious metals appears increasingly stretched, raising the risk of a blow-off peak and a major top forming in the coming weeks or months.
“We are very close to a very significant correction in equities and a blow-off peak in metals that will also put in a major top the next few weeks or potentially a couple of months,” he said.
Speculative assets are losing momentum
Vermeulen added that formerly speculative assets, including Bitcoin (BTC), have already lost momentum, a trend now emerging in mega-cap technology stocks. As investors grow fatigued with sideways price action, capital is rotating away from growth equities toward stronger trends, particularly precious metals.
From a technical perspective, he pointed to limited upside for U.S. equities, with the S&P 500 offering roughly 4.5% upside to resistance near 7,225. The Nasdaq could also edge higher, but any S&P 500 outperformance driven by weak participation from the Magnificent 7 would signal a breakdown in market leadership.
On the downside, equities could still retreat 1% to 2% before finding support. While longer-term trends remain bullish, with prices above rising moving averages, Vermeulen noted such conditions often precede larger late-cycle corrections.
He concluded that a decisive rollover in dominant technology stocks could quickly intensify selling pressure and trigger a broad, potentially severe market correction.
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