The recent pullback has intensified as key indices struggle at major resistance levels. Both the Nasdaq and S&P 500 have formed double-top patterns, a technical signal that often precedes a reversal. The Nasdaq failed to break above its upper trading range, and is now approaching its 50-day moving average, which serves as a critical support level. A break below could accelerate downside momentum, bringing lower price targets into play. Of course, macro events can change this instantly.
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The Russell 2000 has already breached its 200-day moving average, a bearish development that signals small-cap underperformance and potential broader market deterioration.

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Hedging activity has risen alongside these technical breakdowns. Demand for downside protection has surged, with traders increasing volatility exposure through the VIX.

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Retail investors, who had heavily bought into the recent rally, now risk being caught on the wrong side of the trade as momentum shifts against them. Given the combination of weak economic data, deteriorating savings rates (shown below), institutional deleveraging, and deteriorating technicals, the market could remain vulnerable to further downside pressure in the weeks ahead.

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