Near-term US Equity trends look to be turning lower as ^SPX’s close at three-day lows changes the tactical view to cautious while we await further confirmation, even as the longer-term uptrend remains intact. It’s right to turn defensive in the short run for those with a tactical bent, though the setup is genuinely conflicted. Both the 10-year yield and WTI Crude appear to be in the final stages of their bounces and should turn back down sharply on a probable ceasefire and reopening of the Strait within the next one to two weeks, a flush that would be supportive for risk assets. Against that, the negatives have stacked up: Financials remain extremely weak and are a large percentage of ^SPX, market breadth has been poor, TD DeMark exhaustion signals are now aligned, short-term cycles are rolling over in mid-June, and ^SPX fell to new three-day lows. My cycle work points lower near-term but may invert into a low next week, which would defer a more important peak and a larger selloff to the August-to-October window that fits mid-term seasonality. The bottom line is that a minor pullback should be getting underway, and what matters over the coming week is whether a reopening arrives in time to keep it muted.
^SPX fell to new three-day lows, turning the short-term trend down even as the larger uptrend remains intact
^SPX closed Wednesday at 7,553.67, lower by 56.10 or 0.74%, and notably fell to new three-day lows, which, despite still being above initial Ichimoku support, should bring about weakness given the confluence of short-term and intermediate-term DeMark indicator alignment.
It’s hard to make too much of today’s move just yet, but I suspect a pullback that at least partially retraces the rally from the mid-May lows is now upon us, though this need not yet damage the intermediate trend.
Near-term support could materialize at 7,501–7,517, which would prove to be a “non-event.” However, moving down under 7,333.68 opens things up for a larger decline into July expiration. At present, given the possibility of long-term interest rates and Crude oil bouncing this week before turning down in larger fashion — along with the possibility of cryptocurrencies and precious metals turning higher also next week — I’m inclined to trust the intermediate-term momentum in Equities and the possibility of a coming ceasefire (which might line up perfectly with Crude and Treasury yields hitting resistance) more than I credit a short-term decline for being too serious. However, Wednesday’s decline on more than 3:1 negative market breadth looks like a short-term negative development.
S&P 500 Index (^SPX, daily) – Close at new three-day lows turns the short-term trend down while the rising channel from the late-March lows remains intact
The key question is whether this proves a muted, brief correction or the start of something larger, and that likely hinges on the macro catalysts discussed below. I had attempted to pick spots last month and the drawdown proved to be merely four days in duration before promptly turning back higher.
As we know, weekly closes mean more than a daily close for suggesting any kind of trend change. However, enough negatives with regard to breadth erosion coupled with completed DeMark signals are present that some heightened degree of alertness is appropriate at a minimum.
QQQ turns lower on any move under 741, which would confirm the near-term sell for the Nasdaq
On the 15-minute chart, QQQ has begun to break the rising channel that had carried it off the late-May lows, and any move beneath 741 would confirm a short-term sell for the Nasdaq. Such a break would align QQQ with the deterioration already evident in ^SPX and argue for a pullback that at least partially retraces the mid-May advance. Until 741 gives way, the selling pressure has proven more acute in Small-caps and DJIA than in the Nasdaq 100 index, which has largely moved sideways. However, the Invesco QQQ Trust, which is a proxy for the Nasdaq 100, needs to be watched carefully in the days ahead.
As shown below, QQQ damage is still minor, but the burden of proof has shifted to the bulls in the very short run. I would treat a close under 741 as the trigger to reduce tactical exposure rather than to add. Such a development should target the support from 722–727, which might prove to be the extent of this selling pressure for now.
Invesco QQQ Trust (QQQ, 15-minute) – Rising channel off the late-May lows breaking, with a move under 741 confirming a short-term sell
Technology’s cycle composite is rolling over from new highs, one of the negatives behind the short-term caution
The cycle composite for the S&P 500 Technology index looks to be nearing a short-term peak, which gels with DeMark indicators along with the 80-day cycle.
If this were to materialize between now and 6/15, then weakness could be possible into July expiration.
At present, I would note that this composite has certainly had some failures in recent years, and the extent of the rally into early 2026 proved more lackluster than expected.
However, there were some notable wins in this composite as the pullback from 2024 peaks in Technology along with early 2025, and meaningful lows in both 2025 and 2026 seem to have occurred on schedule.
While past results are no guide to the future in this case, if this were to hold, then weakness into late July should happen ahead of a rally into year-end for Technology.
As always, the composite speaks to the timing and direction of turns rather than their magnitude, but a rolling-over cycle in the market’s dominant sector is a meaningful negative when paired with how stretched the group has become. My 80-day cycle points down from mid-June into July expiration, which fits a short-term pullback now, though I would flag the possibility that this cycle inverts and instead carves out a low into next week before ripping higher into the late-July to mid-August window.
Should that inversion occur, the more important peak and a larger selloff would likely be pushed out to the August-to-October window, which would gel with mid-term election-year seasonality — though not necessarily this cycle composite.
S&P 500 Technology Sector Index — Surge in Technology might be nearing a cyclical short-term peak as the cycle composite (pink) rolls over and projects a turn lower
Extreme weakness in equal-weight Financials is an important reason for the short-term defensive posture
The Invesco S&P 500 Equal-Weight Financial ETF (RYF) fell 2.20% to close at 73.64, breaking beneath the shelf of support near 74.40 that had held since March. Financials remain the second-largest sector within ^SPX on a cap-weighted basis, so this kind of extreme absolute and relative weakness weighs directly on the index and is one of the clearest negatives in the current tape. (Even Technology has held up better than Financials in recent days.)
A daily close back above 74.40 would negate the breakdown, but for now the path of least resistance points lower toward the 71 area with the potential for a possible retest of spring lows.
Much of today’s weakness was dominated by cryptocurrency-linked Financials stocks like COIN and HOOD, but given the persistent selling pressure in cryptocurrencies lately, some stabilization is required before expecting a meaningful reversal, potentially out of Financials. Some important weaknesses in BX, KKR, XYZ, and GPN are also happening, and all of these fell more than 4% in today’s session.
Tactically, Financials likely are carving out a “C” wave of a possible ABC decline which started in mid-April. While I remain optimistic on this sector’s chances of eventually rallying back sharply, it does look to weaken more on both an absolute and relative basis over the next few weeks.
Invesco S&P 500 Equal-Weight Financial ETF (RYF, daily) – Break beneath the support shelf near 74.40 that had held since March
The 10-year yield looks to be in the final stages of its bounce and should turn back down sharply on a probable ceasefire
The 10-year Treasury yield near 4.493% looks to potentially follow WTI Crude higher over the next few days, but this minor bounce should signal a possible peak in both Treasury yields and WTI Crude oil before a more meaningful decline in both, which might coincide with an official bipartisan ceasefire.
Based on the hourly charts of ^TNX, WTI Crude, cryptocurrencies, and precious metals, I expect a probable official ceasefire and reopening of the Strait within the next one to two weeks to flush both yields and Crude oil sharply lower.
It’s important to reiterate that the Republican House vote to end the war won’t end US military attacks on Iran, and the Senate would still have to pass the resolution.
US 10-Year Treasury Yield (^TNX, hourly) – Final stages of a corrective ABC bounce toward the 4.554–4.586% zone before an expected turn lower
As I wrote today in Flash Insights, this ^TNX chart has two conclusions:
1) The five-wave decline should now result in a three-wave bounce, which means yields likely push higher and this is happening today. I expect this continues as WTI Crude also makes another 2–5 day bounce up to $99–$101 before both reverse. Yields likely reach 4.554% or a max of 4.585% before starting to turn lower.
2) A five-wave decline from 5/19–5/29 will ultimately need to work a bit lower, which I think happens potentially within 1–2 weeks after this bounce in yields plays out. This gives reason for optimism about the likelihood of a mid-June deal being reached, which I suspect would cause a temporary decline in rates. This US 10-year Treasury yield overall could have a 3–5 day bounce, but then turn down sharply as yields decline.
That coming anticipated decline is the principal positive that might keep any near-term equity pullback muted, offsetting at least part of the negatives from Financials, breadth, and cycles — and precious metals in particular should be bottoming within a week. A sustained push back above 4.586% would defer that view, but my base case, given the most recent wave principle developments on intra-day charts, is for yields to turn back down and limit the equity downside before setting up the next rally.
______________________________
PS: If you are enjoying our service and its evidence-based approach, please leave us a positive 5-star review on Google reviews —> Click here.