Serious cracks are appearing in the bullish narrative of international stock markets, as – according to an analysis by Trust Economics – the three main pillars that supported the bull market in stocks are weakening.
The market picture is changing rapidly and if the deterioration of technical and macroeconomic indicators continues, the next stage for the markets may be particularly difficult for investors.
Market breadth collapsed
During the first wave of selling in stocks, many investors remained optimistic, citing the so-called buying “breadth”. This is an indicator that captures how many stocks participate in the market’s rise and is considered important for assessing the health of an upward cycle.
The logic is that when the rise is not limited to a few large companies but involves a large part of the market, then the bull market is considered more stable and durable. However, according to the analysis, this picture has changed dramatically. Market breadth has collapsed in recent weeks, erasing almost all of the gains recorded in 2026 and removing one of the main arguments for investors who argued that the market remains strong.
High-yield bonds also under pressure
A second key argument from bullish investors concerned the high-yield corporate bond market, which is often considered a more reliable indicator of the true state of the economy.
Unlike stocks, which can react more strongly to news and political developments, high-yield bonds tend to more directly reflect expectations for economic activity and financial stability.
In recent weeks, many investors have argued that the iShares iBoxx $ High Yield Corporate Bond (HYG) ETF has remained relatively resilient despite the decline in stocks.
But the picture has changed. HYG has fallen back to September 2025 levels, a development that analysts say is a strong warning for the market. If these levels are lost, it is considered likely that the upward cycle in stocks is now complete.
Negative technical signals for the S&P 500
The technical picture of the S&P 500, the main index on Wall Street, is also of particular concern. The index has now remained below its 21-week moving average for two consecutive weeks, a level that many technical analysts consider crucial for maintaining the upward trend.
At the same time, the weekly chart is approaching an even more negative signal. The 8-week exponential moving average is close to breaking down the 21-week equivalent, a development characterized as a bearish crossover.
Such crossings in the moving averages are considered by many investors as an indication that a bull market is exhausting its momentum and that a deeper correction may follow…
