The S&P 500 index is no longer climbing to new record highs. Is this the end of the wild rally, or just consolidation before the upward move continues?
This content has been produced by Kvarn Investment Services Oy, a licensed investment firm supervised by the Finnish Financial Supervisory Authority. The content is intended for informational purposes only and should not be interpreted as investment advice or recommendation. All investing involves risks, and past performance is not a guarantee of future returns.
Last week, the Kvarn Pulse newsletter was written in a rather optimistic mood. The stock market correction appeared to have ended, and the S&P 500 index seemed ready to continue its journey toward new record highs
A week ago, it looked as though the stock market was ready to leave the correction behind and continue its uptrend.
A week later, however, we can see that the S&P 500 index failed to reach new record highs and has instead fallen back below its 200-hour moving average.
Two weeks ago, we examined the development of the S&P 500 index through a "traffic light" model.
If we utilize this model again, we can see that the S&P 500 index is currently right on the border between the green and yellow zones. We can also see that the index has remained above its upward-sloping 50-day moving average.
In this light, the index's development does not look particularly concerning.
We must note, however, that the S&P 500 index is currently below its downward-sloping 10-day moving average, which in turn is below its downward-sloping 20-day moving average.
This indicates that the upward momentum has completely broken. We haven't yet seen a definitive reversal of the uptrend, but given the weakness of the past week, we have to take this possibility more seriously than before.
The VIX index, which we often use as a market barometer, currently sits in a somewhat difficult-to-interpret position, right around its 200-hour moving average. VIX readings around 18 cannot be considered particularly high, but on the other hand, the VIX has not yet convincingly returned to the low-volatility levels of previous weeks.
Over in the bond market, the MOVE index has already returned below its 200-hour moving average, which supports the interpretation that nervousness in the markets is easing rather than growing.
Within the stock market, we can see that semiconductors, which acted as the engine for the spring rally, still look quite strong, with the VanEck Semiconductor ETF hitting new highs over the past week.
The Magnificent 7 companies, on the other hand, look remarkably weak as a whole. The price of the MAGS ETF hit a new low again on Wednesday and appears to be in an unequivocal downtrend. About half of the MAGS fund's April–May rally has melted away during June.
Due to the large weighting of the Mag 7 companies, they are dragging the market-cap-weighted S&P 500 index down. In such a situation, it is useful to also look at the equal-weighted S&P 500 index, which currently looks significantly stronger than its market-weighted counterpart.
Last week, we highlighted the possibility of the gold price returning to an uptrend. This hypothesis was based on a few days of rising stock prices for gold mining companies. For a short period, a genuine possibility of a trend reversal was visible in the prices of mining company ETFs.
A week ago, we had to leave the door open to the possibility that our assessment might be premature. A week later, we can see that this was indeed the case. The rally in the VanEck Gold Miners ETF stalled almost exactly at its previous resistance level and has since turned into a steep decline.
The price of gold itself also turned downward, and the price per ounce has now fallen below the $4,000 threshold.
As the stock market rally stalled, the cryptocurrency market also turned into a downtrend. On Wednesday, June 24, 2026, the price of the largest cryptocurrency, Bitcoin, fell to around $59,000, setting a marginally lower bottom than during the sudden drop in early June.
However, we find it noteworthy that, once again, Bitcoin's price did not stay below $60,000 for long. This was the third time in 2026 that Bitcoin's price tested this level without yet falling durably below it.
Unlike Bitcoin itself, the previous support levels for the Bitcoin treasury company Strategy (MSTR) stock did not hold this time. MSTR's share price fell below the psychologically significant $100 mark for the first time since early 2024.
It seems, then, that we will have to wait a bit longer for a new upward move in the crypto market. On the other hand, we can conclude that Bitcoin's price seems to have acted as quite a good "leading indicator" once again, foreshadowing at least a temporary break in the stock market's rally.
Even though the stock market appears to have shifted to a sideways movement at the S&P 500 index level, there are still many interesting segments to be found. The indices are primarily weighed down by the temporary softness in the technology sector, which had previously experienced wild gains, while many more traditional sectors still look quite strong.
The industrials sector, for example, has looked strong over the past week, and the prices of its ETFs are hovering right near their all-time highs.
Various value-factor ETFs also continue to look strong.
As an interesting standalone investment theme, we are highlighting clean water infrastructure. Over the past few weeks, the price of the L&G Clean Water UCITS ETF has climbed to its highest level since March 2026.
The price increases in water infrastructure can be seen as part of the broader strengthening of the utilities sector. The utilities sector as a whole has enjoyed quite strong momentum in recent weeks.
On the other hand, the relative strength of fundamentally defensive sectors, like utilities, comes with a small warning, with which we will conclude this analysis.
The fact that investors are beginning to prefer such defensive sectors is not necessarily a good sign from the perspective of overall market risk appetite.
From the chart below, we can see that when the utilities sector (XLU) began to outperform the S&P 500 index (SPX) in February 2026 following a period of strong underperformance, it was soon followed by equity indices turning downwards.
Of course, it doesn't have to play out that way this time. However, our confidence in the continuation of the stock market rally would be strengthened if we were to see the technology sector begin to lead the market more clearly again, with more defensive sectors lagging behind the index's development.
The stock market is moving sideways, gold and Bitcoin prices are in decline, and there is a slight rotation towards defensive sectors visible in the market. It appears that after the fierce spring rally, investors' risk appetite might be waning, at least momentarily.
The essential question for the coming weeks is whether this will only manifest as sideways movement or if we will see a more substantial downward correction. At this stage, our expectations remain marginally optimistic, but the developments of the past week give us more justified reasons to also prepare for a trend reversal.
Wherever the market goes, we will continue to monitor the situation and keep you up to date, so stay tuned!
The information and sources presented are for illustrative purposes only. While obtained from sources deemed reliable, their accuracy cannot be guaranteed.
The stock market has entered a correction following a drop in the S&P 500, though its broader uptrend remains intact as long as key support levels hold. Meanwhile, the cryptocurrency market has shown signs of stabilization with Bitcoin remaining above $60,000.
Crypto market decline has continued. Stock market still looks fine overall, but we see some signs that may warrant attention.
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