Market bearish signals

What happened: Major indices are on track for their worst month and quarter since the 2022 bear market. The CBOE S&P 500 Volatility Index (VIX), often referred to as the "fear gauge," is nearing multi-month highs, indicating increased investor nervousness. In Japan, the Nikkei snapped a three-day winning streak and may extend losses. Notably, the Dow Jones, S&P 500, and Nasdaq have been virtually unstoppable since the financial crisis, except for brief periods in 2020 and 2022.

Market impact: Defensive stocks, such as utilities and consumer staples, are in focus as investors seek shelter from market volatility. The broad market sell-off has led to a decline in stock market breadth, with fewer stocks participating in the market's advance. This is a warning sign for the overall market health, as it suggests a lack of conviction among buyers.

What to watch next: Investors should closely monitor the upcoming earnings season, with key reports from major tech companies like Apple (April 27) and Microsoft (April 25) on the horizon. Additionally, the Federal Reserve's interest rate decision on May 3 will provide insight into the central bank's stance on inflation and potential economic slowdown. Technically, a break below the 58,000 level in the Nikkei could signal further losses in the Japanese market.