Things are happening in the American stock markets that only the curious and attentive eye can see. Looking at the major indices, everything seems perfect, as the daily news of deal/mergers and the strong balance sheets of major technology companies not only keep the indices afloat but also continue towards their targets. However, there are some significant changes under the surface. First, the stocks of quantum, uranium, lithium, and energy storage/generation companies, which have seen their strongest rallies in recent months, are experiencing significant up-and-down movements in their daily movements. Typically, such situations are often clearly visible after a few moments, when viewed retrospectively on charts: the distribution phase.

As is well known, markets fundamentally have four phases: first, the accumulation phase. During this phase, particularly large investors and those who can assess fundamental factors accumulate assets. When the second phase begins, stocks become prominent among investors, and buying continues to increase. Naturally, the share price rises rapidly. This is called "advance." Then comes the most dangerous phase. In this phase, the stock is deliberately praised and presented to investors on every platform, including social media, company reports, and so on. However, it's the last carriage of the train, and boarding is very dangerous, as it has already arrived at its stop. This phase typically involves significant daily upward movements, with occasional days of relatively large sellers, but when you monitor the stock, you see that it's not actually going anywhere. It's a classic distribution phase. In this phase, the stock changes hands, and large investors who bought at a low price for days, even weeks, are now transferring the stock to smaller investors who have jumped in. The next phase, as we all know, is a sell-off/decline period, and the large investors, having transferred sufficient stocks, dump the stocks on the market in large, large orders. I fear we're approaching this end, but I believe we still have time.

I believe another indicator of this situation is this: the shining stocks of previous months are no longer shining and are trading as I mentioned above. However, major stocks like Mag7 have outperformed former stars in recent weeks. What does this mean? The market is shifting away from "poor quality" stocks and toward "high-quality" stocks with stronger balance sheets. So, what constitutes a high-quality/low-quality stock? We can look at it this way: we wouldn't be wrong if we called the stocks of companies that aren't making money, that is, burning cash and having negative EBITDA, "high-quality." Yes, these stocks sometimes offer great promise, but now they're low-quality. Investors abandon these stocks the moment risks begin to emerge. This is precisely the situation I'm seeing these days. Another perspective supporting this situation is the increased interest in defensive sectors. For example, the healthcare sector, which has been under pressure since Trump's presidency, has become one of the most preferred stocks in recent weeks. Furthermore, utility companies, also known as electricity, water, and gas distribution companies, have moved from the "unfavored" quadrant to the "favored" quadrant. The only missing element in the equation was real estate stocks, which also reached the "favored" quadrant last week. All this suggests that the market is gradually reducing its portfolio's risk appetite.

Also, last week, there were signs in the "Hindenburg Omen" indicator, which is highly valued by market analysts. When run with its default parameters, this indicator is triggered at very long intervals. This is because it looks at the ratio of stocks that have made new highs to those that have made new lows in the same period over the past year and correlates the result with volume. The conditions don't develop quickly. But when they do, it's 88% accurate. Still, we shouldn't just talk nonsense; it can sometimes take months to see results when the indicator is triggered. Of course, it's not like they'll sell off the indices and the world will collapse. For such conspiracy theories, it's best to take to social media. At this stage, the yellow flag is still up, so don't be too hasty in pressing the short button. However, making the necessary adjustments to stock portfolios might not be a bad idea. After all, there are many visible changes. Perhaps a little patience is a matter of patience...