Since the rebound began in 2022, U.S. equities have shown notable strength, but recent technical signals suggest that the trend may be under pressure. Today, both the S&P 500 and Nasdaq 100 saw their medium-term moving averages (e.g., 50-day) cross below their long-term moving averages (e.g., 200-day), forming what’s known in technical analysis as a Death Cross — a signal often associated with the onset of a bearish trend.
In fact, the Russell 2000, representing small-cap stocks, had already entered a Death Cross formation back on March 20. Among the four major indices, only the Dow Jones Industrial Average still maintains its medium-term average above the long-term trendline. Notably, among the “Magnificent Seven” tech giants, TSLA also officially completed a Death Cross today, while others — including AAPL, MSFT, GOOGL, and NVDA — have already entered bearish moving average alignments earlier.
From a purely technical standpoint, the formation of a Death Cross is often interpreted as an early warning of a deeper or more prolonged market correction. The rationale is that momentum is weakening, and sentiment may be shifting from bullish to cautious — or even bearish. However, from a historical perspective, the predictive power of this signal is far from conclusive. An analysis of the last 20 Death Cross events in the S&P 500 shows no statistically significant directional edge — outcomes have been mixed, rendering market interpretation rather ambiguous.
In practice, my experience has been that following a sharp initial selloff, markets often experience a short-term rebound or “retest” toward the breached moving average resistance. Still, unless that resistance is reclaimed decisively, repairing the damaged technical structure typically requires more time.
The key question now is whether this current phase represents a technical bear market — driven by market structure and positioning — or a recessionary bear market — triggered by broader macroeconomic or fundamental deterioration. The latter scenario often leads to multi-phase declines, where short-term bounces do little to reverse a broader downtrend.
All in all, the market is now at a critical technical juncture. Whether the indices can stabilize near their current levels and regain upward momentum depends not just on price action, but also on volume, breadth, and fundamental support from earnings and macroeconomic data. For technical traders, vigilance is warranted. For long-term investors, context and caution should guide interpretation.
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