Dangerous pullback in S&P 500 and Nasdaq 100: will FOMO and TACO trade return?

Exhaustion formations in the bullish trend

The falls in U.S. indices last Friday have caused the formation of bearish engulfing patterns with weekly data. These figures point to fatigue in the preceding bullish trend and cause price oscillators with daily data to cross downwards to their signals. In many cases, bearish divergences appear and overbought levels are high.US NDAQ 100 on daily chart with MACD, extracted from Next Generation on 14/10/25

{{{ SECTION-END }}}{{{ SECTION-For now, pullback to the SMA (50) and AUG25 highs }}}For now, pullback to the SMA (50) and AUG25 highsFriday's fall was broad, although somewhat magnified as the market was accustomed to narrow ranges of variation. At the same time, for now, the indices have found support at the first more or less serious support levels.The SMAs (50) and AUG25 highs, previous resistances and current supports, have managed to halt the falls in the US NDAQ 100, US SPX 500, and US 30. Thus, as long as these supports are not lost, the correction could be interpreted as a pullback or return to important levels.This pullback could invite more than one to join the underlying bullish trend from a short-term perspective. A behavior that has been quite common in recent months: who doesn't know the acronyms TACO trade and FOMO?

US 30 on weekly chart with stochastic, extracted from Next Generation on 14/10/25

However, there are signs of maturity in the underlying bullish trend that call for caution and make the pullback dangerous.

The lack of breadth is one of the most pronounced divergences. The rises have been concentrated in few stocks and many have been left behind. One way to see this phenomenon is to look at the percentage of stocks trading above the most used moving averages.In the case of the S&P 500 and using the data published by barchart.com, we find that, although the index remains above the SMA (50), most of the stocks that compose it are below.

US SPX 500 on daily chart, in yellow SMA (50) and % of stocks above SMA (50) and in blue SMA (200) and % of stocks above SMA (200), extracted from TradingView on 14/10/25{{{ SECTION-END }}}