BlockBeats News, July 24th, cracks have emerged beneath the surface of the US stock market: Nasdaq 100 fell below the 50-day moving average, with the 21-day moving average crossing below the 50-day moving average; S&P 500 has been squeezed in a triangular formation, and a clear break below 7500 points may trigger a faster decline. The Market Ear pointed out in its latest market recap report that if Nasdaq 100 falls below 28500 points, it lacks strong technical support until around the 200-day moving average near 27000 points.

This Thursday, the US stock market experienced a steep decline, with the S&P 500 dropping 1.2% to 7408.30 points, Nasdaq falling 2.2% to 25137.69 points, and Dow dropping about 507 points, causing the combined market capitalization of seven giants to evaporate by about $889 billion in a single day. Alphabet and Tesla tumbled after their earnings reports, prompting a reassessment of AI capital expenditure returns in the market; meanwhile, oil prices surged due to tension in the Middle East, with WTI crude rising above $92, Brent crude briefly surpassing $100, and the 10-year US Treasury bond yield rising to around 4.7%.

The Market Ear believes that oil prices are currently the most underestimated variable in the market. The stock market has had a limited response to the previous oil price increase, but if oil prices continue to rise, inflation expectations, bond yields, and corporate profit margins may all come under pressure, and what was originally an orderly pullback could be amplified into a more chaotic sell-off of risk assets.

Even more worrisome is the volatility exposure. The report states that tail hedging demand overall remains low, VIX ETNs are being continuously redeemed, and asset managers' VIX futures long positions are only in the 1st percentile. The options market has already begun to price in higher premiums for volatility upside protection, with VIX call skewness in the 96th percentile, indicating that some investors are buying insurance in advance for more intense volatility.

Nomura's Charlie McElligott also pointed out that CTA trend-following funds could become the next amplifier. The three-month trend still supports CTAs holding long positions in US stocks, but as the indices decline, this signal is weakening. If the model shifts from long to short, the potential selling pressure on S&P 500-related futures could reach around $25.5 billion.

The current market pressure is no longer just from Alphabet and Tesla's earnings reports. Oil prices, yields, tech stock technical levels, CTA positions, and volatility protection have all become sensitive. In the next few trading days, whether the S&P 500 can hold near 7500 points and whether the Nasdaq 100 can avoid falling towards the 200-day moving average will determine whether this pullback will continue in an orderly manner.