US Stocks Signal 'Ominous Signs': Number of Stocks Hitting New Lows in S&P 500 Continues to Rise

According to sources, institutional analysts have warned that while the US stock market may seem unstoppable, investors should not be complacent as several indicators suggest that this rebound is more fragile than it appears. The upward trend of US stocks is becoming almost parabolic in the long run. A straight market trend is usually a warning signal. However, predicting market tops is a futile game. Unlike market bottoms, which often dramatically form a V shape, market tops can be a long-term process lasting for months. Nevertheless, there are signs indicating that a top may be forming, and investors should be more cautious or at least skeptical of this rebound, and reduce greed. Firstly, the number of stocks hitting new lows in the S&P 500 index has been increasing. In fact, this divergence has reached unprecedented levels. Secondly, there are many potential sellers waiting. The proportion of stocks held by US households in their financial assets has never been higher. When households buy a large amount of stocks, they often push valuations above sustainable levels, leading to a period of poor long-term returns. This is another reason to remain cautious in this market.

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