"Global markets are getting overbought. It might be time to rotate Notably, global markets seem to be entering a period of historically "overbought" levels. With stocks across the globe running hot, well above their moving averages, while market sentiment skews a bit too greedy, and it certainly feels like a market correction is not only a long time coming, but a nice thing to have with all the froth that's built up after a sensational 2025."
"Could it be that investors were getting a tad too greedy going into 2026? Possibly. As for how to play a potential 2026 sell-off, Hartnett still likes gold (the "debasement" trade still seems very much in play) despite the latest single-day correction suffered last Friday, when Trump picked Walsh to succeed Powell as Fed chair. Additionally, bonds, commodities, and international securities were highlighted as a way to play defense."
"While corrections, sell-offs, and crashes (especially bubble bursts) can be very hard to time, I do think that there's no questioning the enthusiasm in the markets going into 2026. Stocks were overbought, arguably overvalued, and January may very well be the new normal for investors. Indeed, extra volatility, bad days, and the odd panic (whether it's gold or tech) are to be expected."
Global markets are entering historically overbought territory, with many indexes running well above moving averages and market sentiment skewing greedy. Elevated valuations and froth after a sensational 2025 increase the risk of a correction or sell-off in 2026. Defensive allocations recommended include gold as a debasement hedge, bonds, commodities, and international securities. The software sector, particularly legal-AI vendors, experienced sharp selling following Anthropic's move into legal tools, intensifying tech volatility. Bitcoin and precious metals could also wobble. Corrections and episodic panics are difficult to time, so investors should expect extra volatility and occasional panic episodes.
Read at 24/7 Wall St.
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