20.08.25 - Fading momentum: correction or consolidation?

Overbought indicators, seasonal patterns, and increasingly weaker follow-through buying near the highs point to fading momentum.

Markets: rally runs out of steam

• US Futures are trading in negative territory

• US 10 year Treasury yield remain above 4.3%

• US dollar moving sideways

• Gold continue to trade within its range, now at USD 3’325/oz

• Cryptos are joining the consolidation/correction pattern

My View: In recent days, the signals for a possible correction have been mounting. Momentum is clearly fading, and the key question is whether this represents a healthy consolidation or the early stages of a correction.

• A consolidation phase could be constructive, helping reset valuations and sentiment, and creating room for a continued rally should buyers step back in.

• However, catalysts for further equity gains are missing: the earnings season is largely behind us, economic data remain mixed, and central banks are in wait-and-see mode.

With multiple warning lights flashing, this environment calls for patience and discipline. I prefer to avoid chasing stretched rallies, keep liquidity available for better entry points, until new positive triggers emerge.

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