Economist Henrik Zeberg has warned that the benchmark S&P 500 index is likely to face a significant reversal, one that could prove devastating.
According to Zeberg’s analysis, the index is forming a rising wedge pattern, historically a bearish signal, indicating the market may be in the final stages of an extended bull cycle, as per his June 25 X post.
The current formation closely mirrors the topping structure observed during the 2000 market peak, drawing stark parallels to the dot-com bubble crash.
Zeberg also highlighted a potential “throw-over” scenario, where prices temporarily breach the wedge’s upper boundary before a sharp and rapid decline, something he expects to precede a steep market correction.
Adding to the bearish case is a divergence between the S&P 500’s price action and the Relative Strength Index (RSI) on the monthly chart. While the index continues to notch new highs, the RSI has trended lower since 2021—an ominous sign of waning bullish momentum.
Notably, Zeberg’s analysis incorporates Fibonacci extension levels, with the key 1.618 extension aligning closely with a projected market peak in 2025. If the pattern holds, the S&P 500 could face substantial downside risk in the months that follow.
Impending economic crash
As previously reported by Finbold, Zeberg has also warned of an impending economic collapse. He maintains that before the downturn, risk assets like stocks and cryptocurrencies will experience a final euphoric rally, followed by a sharp crash.
His renewed warnings come at a time when Wall Street sentiment is turning bullish. To this end, banking giant JPMorgan on June 25 struck an optimistic tone, declaring it’s “time to get bulled up again,” citing easing geopolitical tensions in the Middle East following a ceasefire agreement between Israel and Iran.
Meanwhile, Stifel strategist Barry Bannister forecasts a correction in the second half of 2025, attributing it to weakening consumer demand and rising precautionary savings. He cautioned that this slowdown could expose the cyclical vulnerabilities of Big Tech.
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