Market Prep: AI disruption fears worsen

Market Sentiment Analysis

Hello Traders,

Market's still struggling. The recent Claude updates hit software and cybersecurity stocks hard, and that weakness has spread to the financial sector. IGV was already on thin ice, and today it officially broke below that critical level.

XLF 0.00%↑ Financials are flashing a major warning sign. After retesting its 200-day moving average, the sector has broken below a key support level—a clear signal that risk-off sentiment is beginning to bleed into the credit markets.

Selling pressure continues for BKLN, with the leveraged loan ETF now at its lowest point in nearly a year. Interestingly, junk bonds are still holding steady, showing that the panic hasn't hit the wider market. However, that massive divergence between HYG and BKLN is a major red flag that shouldn't be overlooked as it may signal complacency.

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