Episode summary
Is A Market Breakdown Underway? | Katie Stockton
Thoughtful Money
· · Guests: Katie Stockton
Summary
Katie Stockton said the market is not in a decisive breakdown yet, but it is close enough that the next few sessions matter. She pointed to the Nasdaq 100 already slipping below a watched support level, while the S&P 500 still has some room before its own key threshold. If prices fail to rebound and stay above those levels, she would treat that as confirmation that a larger corrective phase is underway rather than just a short-lived pullback.
Her framework remains constructive over the long term, but increasingly cautious near term. Stockton said support on the major indices is, on average, about 7% below current levels, with the S&P 500’s next important downside markers around the 200-day moving average and roughly 7,240. She also noted that short-term oversold conditions are present, but not the deeper, longer-term washout that would produce stronger buy signals.
Beyond equities, she said credit spreads are an important risk metric and are close to a level that could signal more trouble for stocks. She also sees higher yields as a secular shift that could draw some money into fixed income, while gold may be nearing a near-term low after a long decline. For now, her posture is risk management: stay diversified, respect support levels, and be ready to hedge if the tape worsens.
Key takeaways
- Katie Stockton does not see a confirmed breakdown in the major indices yet, but she says the Nasdaq 100 is already below support and the S&P 500 is close behind.
- If support fails, Stockton expects the next downside area to average about 7% below current levels, with the S&P 500’s next reference points near the 200-day average and roughly 7,240.
- She says short-term oversold conditions are present, but not enough to trigger the stronger buy signals her process looks for.
- Stockton views credit spreads as a major warning signal for equities and says they are near a level that could imply a more serious correction or even a bear-market phase.
- She thinks higher bond yields are a secular shift that makes fixed income more attractive as portfolio ballast, even if she is not fully abandoning equities.
- Stockton sees gold as still in a downtrend, but she thinks DeMark and other oversold measures suggest a near-term low may be close.
Notable quotes
“If we don't see that rebound that the oversold metrics would suggest, uh then I think that's probably a message from the market that we have breakdowns being confirmed”
“The Nasdaq 100 is a secondary input, and it is below its support level that we had been watching, whereas the S&P 500 has a little bit of room still”
“we are not seeing the buy signals because the buy signals require a deeper decline”
How the episode opens
If we don't see that rebound that the oversold metrics would suggest, uh then I think that's probably a message from the market that we have breakdowns being confirmed. — Welcome to Thoughtful Money. I'm Thoughtful Money founder and your host Adam Taggart. Very excited to welcome you here for a very timely discussion with Katie Stockton of Fairlead Strategies. Katie, thanks so much for joining us.
Of course, Adam. Good to be back.
Well, great to have you here and and I very much appreciate you making the time today uh to speak with us because I'm sure it's a very busy Monday for you after last week's action. Um markets sold off at the end of last week um largely over concerns about uh AI and AI-related companies. Um at this point, four of the Mag 7 stocks are now in bear market territory since their highs earlier this year.
That Mag 7 complex is down something like 4 trillion in market cap. Um and it's not just the AI stocks that have been weakening of late. If you look back at, you know, all the other stocks in the S&P 500, I think it's something like well over 60%of the stocks in the S&P are down over 20%from their all-time highs.
So, look, I mean, the S&P is still up for the year. This isn't Armageddon. Um but this weakness is really starting to get people's uh attention and um I'm starting to hear and see the term breakdown uh in the media here.
Um is this a breakdown in progress or is this more likely to be sort of a market slump that's approaching some sort of exhaustion level and then setting up stocks for a rally into the end of the year?
Well, we would hope that it's the latter, but it's just not um quite there yet, right?
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- market breakdown
- technical analysis
- credit spreads
- ai stocks etfs
- gold outlook
Companies and tickers mentioned
- Fairlead Strategies
- Thoughtful Money LLC
Watch the episode
Watch “Is A Market Breakdown Underway? | Katie Stockton” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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Thoughtful Money, this episode and its artwork belong to Adam Taggart | Thoughtful Money. Octagon is not affiliated with the show; this page is an independent summary.
