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The stock market has been making new all-time highs, leading some to wonder if anything can stop this freight train. In fact, the action this summer has felt like a full-blown party. Not so fast. Technical indicators are showing cracks in the 2025 bull market.

Let’s go back to April when the Trump administration announced new tariffs on our trading partners. Markets reacted by plummeting, wiping out the all-time highs that were just made in February.

Once the shock wore off, the SPX 500 and Nasdaq had monumental rallies from the lows in April. Traders and investors realized how many great stocks they could scoop up and the dip buyers flooded the markets. Sentiment quickly shifted from bearish to bullish.

But now, we are seeing signs that a corrective period is at hand, and it could become a much deeper pullback.

4 signs of cracks in the 2025 bull market

Technical indicators are turning bearish

Breadth indicators analyze the number of advancing and declining securities within a market (or index); they tell you if a market trend is strong or not. Well, it turned down sharply last week. That is a bearish sign after indices just reached all-time highs, and it points to a very strong divergent signal.

The put/call ratio is not good

The put/call ratio shifted to a sell signal just as big earnings reports were about to hit. This tells us that big, institutional money managers were/are concerned about how earnings reports would be received. Would reports turn into a “sell the news” event?

Volatility is rising

Market volatility had been very low, showing the complacent attitude of both investors and traders. (Such a stark difference from April when they feared a collapse in the stock market and volatility rose to extreme readings!) Market volatility is rising again, is a stark reminder to be on your toes.

Economic signs are worrying

Economic data last week was mixed, and it was not good. The GDP showed strong movement in the second quarter, which has been attributed to consumers stocking up on big ticket items that will be hit hard by tariffs. The labor report for June was weak, and the big downward revisions for April and May have left economists very concerned.

Here are three things we know:

1. Uncertainty has a flywheel effect.
2. Nobody rings a bell at a market top.
3. A corrective move down of 3-5% will sting.

I want to protect the substantial gains we have made in the past few months, so I am preparing for a worst case scenario. I suggest you take a few proactive risk management actions. Reduce your position sizes, buy more protective puts, and keep lots of cash on hand.

When things settle down and we have a better sense of the market trend, you and I will be ready for the next move.

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