A shift is forming beneath the surface of global markets, even as headline indices hover near record levels.
According to Chris Vermeulen of The Technical Traders, several asset classes are displaying late-cycle behavior that typically appears before broader corrections. The warning signs are not coming from price collapses, but from fading momentum, narrowing leadership, and increasingly stretched technical setups.
Key takeaways
Market momentum is fading despite indices trading near record highs
Leadership from mega-cap technology stocks is weakening, increasing downside risk
Speculative assets lost strength first, a pattern that often precedes broader corrections
Where strength is breaking down first
One of the clearest changes is occurring in market leadership. Large-cap technology stocks — long the backbone of gains in the S&P 500 and Nasdaq — are no longer pushing higher. Instead, they are moving sideways, showing distribution-like patterns rather than accumulation.
When dominant stocks stop advancing, broader indices can continue rising briefly, but the structure becomes fragile. Vermeulen argues this kind of divergence often signals that investor conviction is weakening, even if index levels remain elevated.
What makes this phase more dangerous is that gains are becoming increasingly selective. If the market advances without participation from its former leaders, it suggests that upside is being supported by fewer and weaker drivers.
Speculative fatigue is already visible
Signs of exhaustion are not limited to equities. Vermeulen notes that speculative assets were the first to lose momentum. Markets such as Bitcoin stalled earlier, entering prolonged sideways ranges rather than continuing their upward trend.
Historically, this sequence matters. Speculative assets often peak first, followed by growth stocks, and only later by broader indices. In that context, today’s price behavior looks less like consolidation and more like transition.
As traders grow impatient with stalled charts, capital tends to rotate — not back into risk, but toward assets with clearer trends.
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Metals strength may be late-stage, not early
That rotation has helped fuel strong gains in precious metals, but Vermeulen cautions that this move may already be extended. He believes gold and silver are at risk of forming a blow-off phase — a sharp, emotional surge that often marks the end of a major rally rather than the beginning of a new one.
If metals peak after an explosive advance while equities begin to roll over, it would fit a classic late-cycle pattern where capital seeks safety just before risk assets correct.
Limited upside, asymmetric risk
From a technical perspective, Vermeulen sees little reward left relative to risk. Upside potential in US equities appears constrained by nearby resistance, while downside risk is expanding as momentum indicators weaken.
Small pullbacks of 1% to 2% would not change the larger trend on their own. However, he warns that markets sitting well above rising long-term averages often experience sharper corrections once selling pressure accelerates.
The critical trigger, in his view, would be a decisive breakdown in mega-cap technology stocks. If those names begin trending lower, selling pressure could spread quickly across sectors and indices.
For now, markets remain elevated. But the internal structure — leadership, momentum, and participation — suggests the rally is losing resilience. In past cycles, similar conditions have marked the final stretch before meaningful corrections unfold.
