The S&P 500 and NASDAQ broke below their 50-day moving average last Monday on above-average volume and were unable to reclaim them by Friday. We did get an undercut and rally from Thursday’s low—classic shakeout action—which can set the stage for a bounce next week. Still, the indexes have held the 50-dma since May, so losing it now raises the odds of sideways consolidation at best, or a deeper correction if we see actual capitulation selling.
NVIDIA posted a beat-and-raise quarter Wednesday after the close, sparking a Thursday morning rally—only for the indexes to produce a rare outside-day reversal on heavy volume. That kind of distribution day is a yellow flag. Until the indexes trade back above their 50-dma, this remains a higher-risk environment.
Bitcoin is down over 30% from its 10/6/25 high, and that sharp decline likely contributed to Thursday’s reversal. Crypto is highly leveraged, and when margin calls hit, brokerages often sell equities indiscriminately to raise cash. Meanwhile, the delayed September jobs report came in much stronger than expected, reducing confidence in a December rate cut. Fed futures dropped to 39% odds of a December 10th cut on Thursday before rebounding to over 70% by Friday.
Home foreclosures have spiked 20%, and auto-loan delinquencies have surged 50%—the worst since 2008. A pending Supreme Court ruling on Trump-era tariffs could also disrupt the administration’s agenda if reversed.
For now, big institutional money is hiding in healthcare, medical, staples, and energy while AI takes a breather. The break below the 50-dma may still be just a normal pullback in a long-term uptrend, but the risk can’t be ignored.
Lastly, Japan’s SoftBank reportedly sold its entire Nvidia stake, purchased OpenAI, and then saw its own shares fall from ~$90 to ~$56 (~40%). OpenAI’s circular financing arrangements with public AI companies—and its rapid cash burn—are worth monitoring. I don’t believe the AI bubble is bursting, but this is an area of heightened sensitivity.
May the God of hope fill you with all joy and peace as you trust in him. Romans 15:13