Markets are ‘very close to a significant correction' in few weeks, warns strategist

Market Overview - Most markets are trading near all-time highs, but signs of exhaustion are emerging, indicating a potential meaningful correction in the coming weeks [1] - Recent price action resembles past topping patterns, characterized by strong rallies followed by sharp pullbacks and marginal new highs before momentum breaks down [1] Technology Sector - There is a material fade in upside strength, increasing the risk of a sudden decline, particularly among large-cap technology stocks [2] - The "Magnificent 7," which have significantly contributed to gains in the S&P 500 and Nasdaq, are now exhibiting sideways movement with bearish characteristics [2] - This loss of momentum in major tech stocks undermines broader indices, especially the Nasdaq, signaling waning investor enthusiasm for previously dominant themes [2] Precious Metals - 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 [3] - A significant correction in equities and a blow-off peak in metals are anticipated within the next few weeks or potentially a couple of months [3] Speculative Assets - Speculative assets, including Bitcoin, have lost momentum, with a trend emerging in mega-cap technology stocks as well [4] - Investors are rotating capital away from growth equities toward stronger trends, particularly in precious metals [4] Technical Analysis - Limited upside for U.S. equities is noted, with the S&P 500 offering roughly 4.5% upside to resistance near 7,225 [5] - The Nasdaq may also see slight increases, but any S&P 500 outperformance driven by weak participation from the Magnificent 7 would indicate a breakdown in market leadership [5] Market Correction Potential - Equities could retreat 1% to 2% before finding support, with longer-term trends remaining bullish [6] - Conditions often precede larger late-cycle corrections, and a decisive rollover in dominant technology stocks could intensify selling pressure, triggering a broad market correction [6]