5 Bearish Signals for US Stocks: Gold, Bitcoin, and Bonds All Mapped Out
5 Bearish Signals for US Stocks: Gold, Bitcoin, and Bonds All Mapped Out
The S&P 500 is hanging precariously just above its 200-day moving average. The Dow Jones is registering a -5 to -6 bearish score on the EdgeFinder, and the financial sector has fallen 13.6% from peak to trough. Here is a breakdown of what each major asset class is signaling right now.
1. S&P 500: Testing the 200-Day Moving Average
The S&P 500 has pulled back to its 200-day moving average—the same level where buyers stepped in aggressively on Sunday's gap-down open.
For long-term bulls, the 200-day moving average is the last line of defense. When this line previously flipped from resistance to support, it was a massive bullish signal. Now the inverse logic applies: if it breaks, sellers could take control.
The index is still only 4.5% off its highs. That is not a discounted market. In my view, you need 7-10% correction territory before genuine bargains start appearing.
2. Dow Jones and Financials: Recession Warning?
The Dow is getting a -5 bearish reading on the EdgeFinder—a composite score incorporating technicals, sentiment, economic growth, inflation, and labor market data.
What is more concerning is the financial sector.
Financial ETFs have completely lost their 200-day moving average on the daily timeframe, with a peak-to-trough decline of 13.6%. Financials are the economy's bellwether. When this sector takes a beating like this, the market is pricing in meaningful concerns about the real economy.
Anxiety around private credit markets, additional pressure from rising 10-year yields—it is all converging on financial stocks.
3. Japanese Bond Yields: The Stealth Global Rate Hike
This one has not been getting enough attention. Japanese government bond yields are climbing again, and here is why that matters more than most people realize.
For decades, hedge funds and sovereign nations have borrowed at ultra-low rates from Japan. It was the engine of the global carry trade—borrow cheap in Japan, invest everywhere else. That structure is changing.
Rising Japanese bond yields function as a de facto global rate hike, because so much of the world's low-cost borrowing originated in Japan. 2026 is proving to be a year of sharp reversals across many market dynamics.
4. Gold: Bullish and Bearish Pressures in a Standoff
Gold cannot find direction right now, and the reason is simple: bullish and bearish forces are pulling with equal strength.
Bullish: Geopolitical uncertainty. War, strait blockades, energy crises—the classic gold-friendly environment.
Bearish: Strong dollar and rising bond yields in both the US and Japan. Rising interest rates are the most powerful bearish force for gold, since gold pays no yield and becomes less attractive relative to interest-bearing assets.
The put-to-call ratio shows gold moved from heavy put demand to a more neutral reading. My stance: neutral.
5. Bitcoin: Surprising Relative Strength
Bitcoin has been impressive. While global equity markets have been selling off, Bitcoin has maintained its range and sits near the top end today.
Technically, it looks good. But I prefer to see macro fundamentals supporting the technical picture. Right now:
- Inflation outlook: not great
- Economic growth: meaningfully decent
- Labor market: continued weakness
Overall, I have a mixed view on Bitcoin. But if economic data starts materially improving, the combination of relative strength and solid technicals would make this a spot where I would look for longs.
Bond Market Signal: Decidedly Bearish
Finally, bonds deserve attention. They are registering a notably bearish reading on the EdgeFinder.
Soft labor market data suggests rates could eventually come down, but the 2-year yield screaming higher on oil prices signals that inflation may remain sticky. Recent economic growth data has also been fairly strong—a bearish factor for bonds.
Yields move higher on growth expectations and inflation, especially on the long end where the 10-year tracks. The bearish bond outlook supports both dollar strength and expectations for continued 10-year yield increases.
Investor Sentiment: Most Bearish in Months
The AI Investor Sentiment Survey is at its most bearish reading in months. A Middle East war breaking out naturally makes investors uncertain.
But here is where I would urge caution. Last year, extremely bearish sentiment during the tariff tantrum turned out to be a buying opportunity. The Trump administration could reverse trade policy at any moment, and the market knew it.
This time is different. The Strait of Hormuz situation involves a US adversary in Iran, with China and others incentivized to make this painful for America. This cannot be washed away as easily.
At just 4.5% off highs, I cannot call this a cheap market. Individual names are starting to look attractive, but at the aggregate level, stocks are not cheap yet.
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