Friday’s selloff broke something in the stock market. Here’s what that means for investors.

Core Viewpoint - The stock market is experiencing a shift following a recent selloff, with increased caution advised due to renewed trade tensions between China and the U.S. [1][2] Market Sentiment - Investors are reminded of the downside risks that remain underpriced, as highlighted by Citadel's head of fixed income, indicating vulnerability in equity markets to shocks at current valuations [2] - Longview Economics' chief market strategist expresses caution regarding stocks, suggesting that the robust upward momentum may have been broken [3][4] Technical Analysis - The market's recent pullback was attributed to speculative and overbought conditions, with market timing models indicating a vulnerable technical state [4] - Longview's selloff indicator is now signaling the start of a retreat, which has a strong track record of predicting pullbacks [5] - Price action in key stock market areas was described as "near vertical" prior to the fall, confirming the selloff indicator's message [6] Market Dynamics - The aggressive upward momentum in the market suggests occurrences of short squeezes and FOMO (fear of missing out) buying, impacting major companies such as ASML, Oracle, Alibaba, Tesla, and others [7]