The US equity market is under pressure as futures spiral, the VIX surges, and Treasury yields plunge—signaling a potential structural crisis.
Panic marks the start of Q2
The first week of April has turned into the worst period for US equities since February 2020. Major indices plunged more than 9% over the five-day period, driven by intensifying global economic turbulence, most notably the escalation of US tariff pressure. Investors are fleeing risk assets en masse, reallocating capital toward cash and defensive holdings.
The panic is compounded by a lack of clear direction and heightened intraday volatility.
The S&P 500 closed Friday's session at 5,074 points and opened Monday with a significant gap down. Futures lost an additional 5%, and if pressure persists into the main session, a breakdown below 4,860, the key support level that has held for months, could occur. Below this level, the next targets are 4,772, 4,682, and the critical 4,592 mark, which would represent a full retracement of the gains from the previous rally.
The Nasdaq 100 is also slipping into dangerous territory. Futures are already testing 16,540. A confirmed move below 16,480 would place the index in a high-risk zone, with targets at 16,096, 15,714, and the pivotal 15,330 level. Given the current pace of selling and widespread capitulation, these targets could be reached in a matter of days.
The Dow Jones is holding just above 36,900, but pressure on the 36,667 level is intensifying. A breakdown there opens the path toward 36,409, followed by 35,990 and 35,315—long-term support levels.
The current market action reflects not merely a pullback, but the emergence of a new downtrend. Selling volume is increasing, signaling a structural repricing of assets and a rejection of prior fair value assumptions.
Technical outlook: market is vulnerable
From a technical perspective, the market is in a rare condition—overbought on volatility, yet oversold on price. This creates room for short-term technical bounces.
However, such rebounds are likely to be used by institutional players to reduce long exposure rather than initiate fresh risk positions.
The RSI and MACD indicators on daily and 4-hour timeframes are in extreme zones, which typically precede corrective rallies. Still, the absence of volume confirmation and elevated VIX levels cast doubt on the reliability of these signals.
The breakdown of key support in the S&P 500 and Nasdaq 100 greatly reduces the likelihood of a V-shaped reversal. Former support zones now serve as resistance. For the S&P 500, those levels are 4,917, 4,952, and the psychological 5,000 mark—each now vulnerable to renewed selling pressure. A similar pattern is emerging across other indices.
The technical structure increasingly resembles a clear trend break, marked by fresh lows and a shift into a bear-market phase.
VIX-yield divergence: systemic warning sign
Perhaps the most telling development of the week is the sharp divergence between the VIX volatility index and US 10-year Treasury yields, a classic indicator of structural instability.
The VIX, a barometer of market anxiety, has broken out above its long-term resistance line and is now holding above 45, levels last seen during major systemic crises, including the pandemic and banking shocks. If current momentum continues, the next VIX targets are 46.76, 50.75, 53.22, and 57. Support levels lie at 41.25, 37.26, and 34.80.
At the same time, the yield on 10-year US Treasuries fell below 4.16%, testing the psychologically important levels of 4.00% and 3.90%. These are not just technical markers. They represent consensus expectations about the economy. Breaking below them reflects mass flight to safety and growing fears of an economic slowdown.
Further downside targets for yields include 3.70%, 3.62%, and 3.32%, levels historically associated with recessionary conditions.
The combination of surging volatility and plunging yields sends a clear message: this is more than panic. It signals a shift in market paradigm, a wholesale retreat from risk amid growing demand for government bonds.
Conclusion: structural shift underway, bear phase deepens
Current market dynamics point to the beginning of a structural shift in investor sentiment. The divergence between the VIX and 10-year yields is not a temporary anomaly, as it reflects a fundamental reassessment of macroeconomic prospects.
Spiking volatility, support breaks, futures capitulation, and a flood of capital into bonds all suggest a transition from a correction phase into a sustained bear market.
Until bond yields stabilize and volatility subsides, the market is likely to remain vulnerable. Even temporary rebounds will do little to change the broader downtrend. Upcoming Federal Reserve decisions and macroeconomic data will be critical in shaping the path forward.
For now, investors should remain cautious, reduce exposure to risk assets, and closely monitor the VIX and Treasury yields. These are now the market's most important weather vanes.
