The Correction Everyone Asked For Just Knocked on the Door.
For nine weeks the market did one thing: rise. No pullback, no healthy correction, just a relentless climb from the March 30 bottom. Every investor said the same thing quietly: we need a breather to digest. Today they may have gotten the first sign of one.
The focus shifted to a single phrase from this edition: unfavorable news has come at length. The fragile Iran ceasefire reignited. Iran struck at US bases in Kuwait and Bahrain after the US hit an oil tanker near Kharg Island. Trump refused to sign the peace deal sitting on his desk. Oil, which bottomed at $87.36 on May 29, turned back up. And for the first time in this rally, the four major indexes split: the Dow fell, NASDAQ and S&P went mixed, and only the PHLX semiconductor index kept climbing. Fear and Greed dropped to 55, leaving Greed and entering Neutral for the first time in weeks.
The second layer is what the divergence tells you. When indexes stop moving together, the easy phase of the bull market is ending. Money is no longer lifting everything at once. It is choosing. PHLX up while the Dow falls means capital is still committed to chips and AI, but it has stopped paying for everything else. NASDAQ is going horizontal, exhausting, not crashing. That is the textbook shape of digestion, not collapse.
The warning is the rate clock underneath it all. The CME now prices a real chance the Fed flips from cutting to hiking by December 2026 or January 2027. That shift is, in Daniel Yue’s words, somewhat unavoidable. A healthy correction the market can absorb. A rate-hike cycle into stretched valuations is a different animal, and the line between the two is thinner than it looks at a Fear and Greed reading of 55.
Watch whether this dip stays shallow and rotational, or whether NASDAQ breaks its horizontal floor. The first is the breather everyone wanted. The second is the correction nobody is positioned for.
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About the Author
Daniel Yue has been an active investor since 1980, with experience spanning stocks, currencies, futures, metals, and bonds. A scholar of the Chicago School of Economics, he holds a Certificate with Distinction from Cambridge University and a degree in International Trading from National Taiwan University. He served as Chief Analyst for over 30 years and Chief Mentor at Sincere Finance. In 2017, he received an award from the University of Arizona for financial internship leadership.
The analysis and opinions expressed in this article are for educational purposes only and do not constitute financial advice. Investing involves risk. Please consult a qualified financial advisor before making investment decisions.
About the Author
Daniel Yue has been an active investor since 1980, with experience spanning stocks, currencies, futures, metals, and bonds. A scholar of the Chicago School of Economics, he holds a Certificate with Distinction from Cambridge University and a degree in International Trading from National Taiwan University. He served as Chief Analyst for over 30 years and Chief Mentor at Sincere Finance. In 2017, he received an award from the University of Arizona for financial internship leadership.
The analysis and opinions expressed in this article are for educational purposes only and do not constitute financial advice. Investing involves risk. Please consult a qualified financial advisor before making investment decisions.