Lead-Lag Report: Market Signals and Bear Market Warning Signs with Vincent Randazzo
The stock market’s returns in 2025 have been abnormal. The extent of the spring pullback was exacerbated by tariff and trade war headlines. The rebound has been sharp, thanks to positive headlines on that front.
Today’s investors may feel that stocks have the “all-clear” to head back to all-time highs. However, the selloff created significant damage. Looking at today’s market, it’s likely that a swing lower and continued high volatility are the likely outcome over the next few months.
For instance, market breadth remains a key indicator. When stocks were rallying in 2023 and 2024, they were largely led by big-tech plays, such as the Magnificent Seven.
In late 2024, other market sectors started outperforming tech. This led to rising market breadth, where more stocks were contributing to the rally than just a handful of names.
In 2025, market breadth is now deteriorating. That is typically a sign of a bear market, not a bull market. At the very least, it suggests that the recent market weakness may last for longer than expected.
Plus, small cap stocks have been underperformers over the past few years. Typically, these stocks lead markets higher in bull runs. That hasn’t happened in the past few years.
With markets showing signs of weakness, investors should tread lightly, especially in the short-term.