S&P 500 flashes major crash signal

Core Viewpoint - The S&P 500's bullish momentum may be nearing a stall, with technical indicators suggesting a potential imminent drop, as the index closed at 6,728, up 0.13%, but has corrected more than 2% on a weekly basis [1][5]. Technical Analysis - The S&P 500 has fallen below its 50-day moving average for the first time since April, which could indicate a turning point after months of strong performance above this key support level [3]. - The 50-day moving average has historically supported the rally, and losing it may signal fading momentum [3]. - A previous similar event in May 2021 saw a brief dip below the 50-day average followed by a sharp rebound, raising doubts about whether the current situation will mirror that outcome [4]. Market Fundamentals - The recent pullback coincides with mixed market developments, including the worst month for layoff announcements since 2003, prompting a flight to safety that pushed the 10-year Treasury yield below 4.1% [5]. - Shares of Nvidia and Advanced Micro Devices declined after comments from a White House official indicated there would be no federal bailout for the AI sector, raising concerns about a potential market bubble [6]. - Despite the pullback, analysts expect S&P 500 earnings to grow approximately 11.6% in 2025, with a forward P/E ratio around 22.7, which is above the historical average [7]. Cautionary Signals - Prominent figures on Wall Street, including executives from Morgan Stanley, Goldman Sachs, and JPMorgan, have warned of a potential 10–20% market correction within the next two years [8].