‘Bevath of fifty percent’ threatens at the stock market, warns top strategists

The US stock markets seem to be stronger than ever, but something dangerous is brewing under the hood. According to Markt strategist Chris Vermeulen, we are on the eve of a tough correction – a decrease that can rise to more than fifty percent in some indexes.

Vermeulen, head strategist at The Technical Traders, sees worrying signals. “The big indices set records, but that is almost only due to a handful of tech giants,” he said in an interview with David Lin on August 25. “The rest of the market hardly participates.”

‘We are in phase three – and it rarely ends well’

According to Vermeulen we are in what he calls an “Stage Three Topping Phase”. That is a stage where the market still seems to be increasing, but underlying the underlying. Small and medium -sized companies in particular are left behind. And that is often the prelude to a strong decrease.

If sentiment tilts, according to him, that can lead to a transition to “Stage Four”: a financial reset in which some indexes can plummet by fifty percent or more.

Season patterns also give little hope. The months of August to October are historically known as unstable and often full of substantial corrections.

AI hype sanitizes fragic fundaments

An additional care is the hype about artificial intelligence. Vermeulen warns that this innovation wave is temporarily masking the true risk of the markets. As soon as the hype decreases, investors can get out en masse.

OpenAi CEO Sam Altman also recently expressed doubts about the shelf life of the AI ​​madness. He pointed to the gap between the towering expectations and the actual profitability of AI projects. According to him, the market runs the risk of heavy losses if reality cannot meet the hype.