Warning: The S&P 500 Index Is Becoming Much More Dangerous Than Many People Realize

Prices are still holding steady, but the fundamentals and momentum are deteriorating.

Let’s start with the economy first. The latest Challenger data shows 108,435 layoffs in January 2026, the worst January since 2009, when the U.S. was in a recession. At the same time, hiring has not offset those job losses. The job openings-to-unemployment ratio has fallen to 0.87, meaning only 87 jobs for every 100 unemployed people. The number of job openings has also decreased to 6.5 million, the lowest in over five years. Wage growth has also slowed to 0.7% in Q4, the weakest pace in 4.5 years. Next is the housing market, another key economic pillar. Currently, the number of home sellers in the U.S. exceeds buyers by about 630,000, the largest gap ever recorded. Now, let’s talk about spending. Core retail spending declined 0.1% in December, the weakest since May 2025. Now, let’s move to the bond market. 10-year bond yields are rising much faster than 2-year yields, creating a strong bearish environment. Additionally, major countries are divesting from U.S. bonds, adding further upward pressure on yields. And this is happening while many external pressures remain active: • Tensions with Iran are still unresolved. • China continues to reduce its holdings of Treasury bonds. • The Federal Reserve remains hawkish. Now, let’s look at the technical aspect. The daily RSI index shows weakness even as prices are rising, a pattern very similar to what we saw in Q1 2025 before a major correction. When prices rise but momentum wanes, it often signals trend exhaustion rather than new strength. So, when you combine all these factors: -> Weakening employment data. -> Declining job demand. -> Lower spending. -> Housing imbalance. -> Steepening bond sell-off. -> Geopolitical risks. -> Hawkish Fed stance. -> Momentum divergence on the chart. You will see a market gradually losing strength and disconnecting from fundamentals, which usually doesn’t last long.