The Technical Picture for the Stock Market Has Taken a Turn for the Worse

Key technical indicators continue to blink red, with breadth low and the S&P 500 dipping below the 50-day moving average.

Key Takeaways

• S&P 500 Losing Streak Risks A Key Threshold: As per Walter Murphy: “Looks like a test of the April low is on the table.” This is the magic number for the S&P 500 to see if we get that break… 6,550. My guess is that nobody is going to listen. After all, investor sentiment could scarcely be more optimistic (with the Citi Panic/Euphoria index measuring sentiment on the stock market now at .79, almost double the “Euphoria” threshold of .41).

• Bitcoin’s Reversal Continues: For the first time in seven months, Bitcoin, long the poster child for the risk-on trade, has sliced below the $90,000 mark, extending its dramatic decline from the $126,000 peak just six weeks ago. The April low was $74,400, and options traders have that level in their sights right now. The liquidation keeps piling up, but this is what happens in a bear market — elevator down. So much for the digital asset revolution, at least with respect to the price aspect of this file.

• Burry Sounds the Alarm About AI Accounting: One mystery out there is why there has been scant attention being paid to the fact that Michael Burry just shuttered the fund he started back in 2013 (Scion Asset Management). He wrote on his X post that the Tech companies he had been shorting, the ones centering their focus on the AI infrastructure boom, have basically been dishonest in their accounting methodologies.