Veteran Analyst Identifies Critical Market Reversal Signal in Major Indices

A long-time technical analyst has identified a critical reversal pattern in major U.S. equity indices, raising concerns about near-term market direction. The signal, detected in the S&P 500 and Nasdaq-100, involves a bearish divergence between price action and momentum indicators. Specifically, the 50-day moving average fell below the 200-day moving average in the S&P 500 on January 15, marking the first such death cross since 2022. Concurrently, the Nasdaq-100 recorded a 3.2% decline over the past five trading sessions, despite no major macroeconomic catalysts. The divergence was confirmed by a weakening RSI (Relative Strength Index) reading, which dipped to 48.7—below the neutral 50 threshold—while prices remained elevated. This disconnect suggests that upward momentum is fading, even as index levels hold. The analyst noted that the volume profile during recent rallies has been below average, with the latest advance on January 14 showing only 78% of typical volume, indicating a lack of conviction among buyers. Market implications are significant: the S&P 500 has now entered a correction zone, down 10.3% from its January 4 peak. The Nasdaq-100, heavily weighted toward tech, is down 14.1% from its recent high, with 72% of its constituents trading below their 200-day moving averages. The signal has prompted increased attention from institutional traders, with options activity showing rising put-call ratios across several major ETFs, including QQQ and SPY. Traders and portfolio managers are re-evaluating risk exposure, particularly in high-growth sectors. The signal could influence upcoming asset allocation decisions, especially ahead of the next FOMC meeting on February 2, 2026, when rate policy remains uncertain.