The Nasdaq has experienced some concerning weakness, raising an important question: Are stocks forming a major market top, or is the recent pullback simply part of a normal correction within an ongoing secular bull market?
History tells us that major market peaks often develop gradually, with deterioration appearing beneath the surface before the broader market experiences significant losses. However, periods of weakness and uncertainty can also occur during healthy long-term uptrends.
This week's video examines the weight of the evidence from multiple timeframes, comparing current market conditions with previous periods of significant weakness, including 2018, 2020, and 2022.
We'll examine the Nasdaq's technical condition, momentum, market breadth, leadership trends, and the relative performance of growth stocks versus the broader market. We'll also review longer-term trends in the NYSE Composite, defensive sectors, high-yield bonds, and investor preferences for stocks versus Treasury bills.
Are warning signs beginning to accumulate, or does the longer-term evidence continue to support the bull market? What developments would increase the probability of a more serious decline, and what would suggest the market is simply experiencing another temporary setback?
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