Forecasters worry stocks could see a speculative ‘blow-off top’ rally that ends in another painful decline

• Wall Street is eyeing a rapid rally to the top that will lead to another steep decline.

• Stocks have rebounded sharply since the last ceasefire, but a formal peace agreement has yet to be reached.

• Analysts are watching for a market “consolidation” that could occur in May.

There is an increasingly fearful scenario on Wall Street: bull market The rally that sent stocks to all-time highs will see another rise before ending in a painful decline.

Although the Iran war is technically still ongoing, talk of an explosive “burst from the top” is increasing as markets rebound sharply. S&P 500Oil, which dropped by approximately 7% from the beginning of the war to the end of March, is currently at record levels, up 12% from its bottom.

The market is largely supported by optimism that a solution is approaching, particularly that of the United States and Iran. extended the ceasefire. But doubts are growing among some forecasters who think the latest surge could soon end in disappointment for investors.

Universa Investments CIO Mark Spitznagel said he is doubling down on his view that the market is heading for an uptrend. explosive peak rally In the midst of the Iran war, he thinks he can push the S&P 500 to 8,000 before the index falls.

Spitznagel, who has been tracking a rally and subsequent crash in stocks for years, previously told Business Insider in February that he expected the decline to be comparable to the decline in the United States. 1929 stock crash.

“If someone is bullish today and they weren’t three years ago, they need to seriously reconsider their investment approach,” he told Business Insider of his current perspective.

David Rosenberg, a top economist and founder of Rosenberg Research, is also a sharp rally – probably stems from investors’ fear of missing out on opportunities before they fall into a deeper decline. Many investors are likely to remember the post-Independence Day rally, he said, noting how stocks rose after President Donald Trump softened his stance on global tariffs.

“Can this rally continue? It certainly can. But could it continue, leaving the market increasingly subject to disappointment and another decline? That’s also likely,” Rosenberg said in a note to clients Wednesday, pointing to how quickly valuations have rebounded despite an “unstable” risk environment.

“In this sense, the latest bounce looks more like a FOMO-driven squeeze that could once again give way to a flatter, more corrective phase, similar to that seen in late 2025, unless a meaningful policy catalyst arrives,” he said.

Goldman Sachs also signaled the potential upcoming stock decline despite the fact that the current rise has a negative impact on risk assets. Although the bank stuck to its 7,600 price target for the S&P 500 by year-end, the risk of a new decline following the sharp relief rally remains “high,” analysts wrote in a note this week.

Despite the continued momentum, stocks will likely see a “consolidation” next month, according to Mark Newton, head of technical strategy at Fundstrat Research.

“As a result, I think the recent sharp move will likely require consolidation in May. But right now, it would be prudent to watch for evidence of a worsening trend before attempting to sell into this rally,” he wrote in a note on the mixed outlook for stocks.

Technical analyst and manager of Renaissance Macro Research, Kevin Demter, said there are signs that a new “momentum” has begun in the market. He noted signals such as the increasing percentage of stocks rising over a 10-day period.

Still, he wrote, positioning on the S&P 500 appears to be near “extremely bullish.”

““While the outlook is still on momentum, we would characterize this as a later phase where the risk of a speculative peak increases, potentially reminiscent of 1999,” he said.

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