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

• S&P 500 has limited upside of roughly 4.5% to resistance near 7,225, but could retreat 1-2% before finding support in the near term
• The Magnificent 7 stocks are losing momentum and showing bearish patterns, undermining broader indices like the Nasdaq and signaling waning investor enthusiasm
• Previously speculative assets like Bitcoin have already lost momentum, with capital rotating away from growth equities toward precious metals, which themselves face risk of a blow-off peak

Market Correction Warning Summary

Key Warning:

Chris Vermeulen, chief market strategist at The Technical Traders, warns that markets are approaching a "very significant correction" within the next few weeks to months, despite trading near all-time highs. He identifies clear signs of exhaustion across multiple asset classes.

Technical Indicators:

• The S&P 500 has limited upside of approximately 4.5% to resistance at 7,225
• Potential downside of 1-2% before finding support
• Recent price action mirrors historical topping patterns characterized by strong rallies, brief consolidation, and marginal new highs before momentum breakdown

Market Leadership Concerns:

The Magnificent 7 stocks, which drove gains in the S&P 500 and Nasdaq, are now moving sideways with increasingly bearish characteristics. This weakening leadership undermines broader indices, particularly the Nasdaq, and signals declining investor enthusiasm for previously dominant technology themes.

Asset Class Vulnerabilities:

• Equities: Risk of sudden, aggressive decline as upside strength fades
• Precious Metals: Rally appears stretched, raising risk of blow-off peak and major top formation
• Speculative Assets: Bitcoin and mega-cap technology stocks have lost momentum
• Capital is rotating from growth equities toward precious metals as investors grow fatigued

Market Implications:

While longer-term trends remain bullish with prices above rising moving averages, Vermeulen notes such conditions often precede larger late-cycle corrections. A decisive rollover in dominant technology stocks could quickly intensify selling pressure and trigger a broad, potentially severe market correction across equities.

The strategist emphasizes that weak participation from the Magnificent 7 would signal a critical breakdown in market leadership structure.