You know that feeling where you don’t want to give up on a bull market? Sure, you do, you’re probably felt that emotion hard over the last week. I have too, but the writing is on the wall, this market is going lower.

This week you need to expect to see volatility rule the market as investors continue to move between fear and the fear of missing out.

The move below the Nasdaq 100’s 200-day puts us in a position to see this bearish trend for stock continue through March with a growing probability that the market will head lower through the first half of the year.

On the Data Front
investors will get a look at inflation measures on Wednesday and Thursday as the monthly CPI and PPI reports are due from the Bureau of Labor Statistics. Both reports hold risk for the market with very little rewards as the Fed has already made it clear that they will be holding on interest rates until the situation with the Administration’s tariffs is figured out.

Earnings season comes closer to a close with a handful of retail companies report (Dick’s Sporting Goods (DKS), Williams-Sonoma (WSM), Ulta Beauty (ULTA) and Adobe (ADBE) all but finishes the technology earnings season.

While there are some potential drivers for stocks to mark a short-term bottom, don’t fall for it.

Stocks are ripe for a “dead cat bounce” that could last days, maybe even a week or two, but don’t fall for it!

The trends in stocks have shifted against you and this looks to only be the beginning of a larger move that will be driven by fundamentals, technicals and investor sentiment… the most powerful combination for long-term shifts in the market.

Here are the details on what you need to know and how to respond to the market’s weaknesses.

Tariff Time
This is the number one problem with the market right now, Tariffs!

I realize that I’m not breaking news here, but I need to walk through the “why” with regards to the impact we’re seeing from tariffs.

It all comes down to one word… UNCERTAINTY.

Investors, analysts and the most veteran of veterans on Wall Street have one fear, its uncertainty. Give an investors or trader a “certainty” like bad earnings, we’re in a recession, inflation is rising, etc… and they can adjust their portfolio accordingly.

Raise cash, buy protective puts, whatever the adjustment, they know what needs to be done to protect or profit.

We’re as far as we can be from having any certainty about the tariffs right now and it appears that’s not changing in the near-term. This is the biggest weakness for stocks right now.

But it gets worse.

Sure investors are growing tired of the one and off again situation that is being driven by the daily headline changes, but there’s one thing that they won’t do… sell.

Investors sentiment has remains stubbornly optimistic over the last two weeks. On top of that, investors are trying to catch the falling knife of lower stock prices on just a single positive headline. This almost always makes matters worse.

Last week, on two days, investors overreacted with short-term buying to headlines that the Trump Administration was either delaying or reducing tariffs with Canada and Mexico. The week still ended as the worst since October for the S&P 500.

The reason for the brave optimism? A hangover from the post-pandemic “buy the dip” rage. Don’t take this as a sign that “buy the dip” is a bad strategy, just understand that there are times when using the strategy are right and times when it is wrong. Right now, is the latter.

This Market’s Trend Has Turned, Period
Investors need to remember that healthy corrections turn into market corrections when trends turn. The last part of that statement is the most powerful… WHEN TRENDS TURN.

That’s exactly what has happened over the last month, the trends have turned unfriendly for investors, yet a large balance of them continue to try “calling a bottom”.

Here’s a hint, it’s always better to let others call the bottom.

Give up the idea of trying to buy stocks at the exact bottom and accept that you’re willing to start putting money back into stocks after we’ve seen the trends turn back into favor for the bulls.

This move may cost you in terms of losing bragging rights with your friends, but your portfolio returns will be much better one year from now.

Here’s When You Get Back into Stocks
I’m going to give you two methods for using the market’s trend to identify when the time is right to get back into stocks.

Method 1: The Trend is Your Friend Method
You’ve hear the saying, “the trend is your friend”, use this term to identify when the time is right to get back into stocks. Here’s how you do it.

The 50-day moving average is the best indicator of a market trend. When the 50-day is trending higher, the trend is friendly. When that 50-day is trending lower, stocks are not your friend.

Simply watch for that shift to take place on the Nasdaq 100 (QQQ) or S&P 500 (SPY) before you start to buy into the next long-term bull market.

Here’s a chart to illustrate the “timing” of this trendline.

Method 2: The Momentum Method
Momentum for the Nasdaq 100 turned negative last week on March 6.

How do I pinpoint the date? That’s the day that the Nasdaq 100 (QQQ) 20-day moving average crossed below its 50-day moving average. That shift is a signal that intermediate-term momentum is now bearish.

Here’s the chart…

With this chart, the reverse will identify when momentum on the Nasdaq 100 has shifted to favor the bulls. Simply look for the 20-day moving average to cross above the 50-day as your signal to start buying stocks again.

The last “buy” signal that we saw from this method was in late-September ahead of what would be a 15% run higher in the Nasdaq 100.

There is a catch….

Should stocks move into a long-term bull market trend, each of these methods will result in some volatile readings, which is why I use both at the same time.

Bottom Line
If you are an active long-term investor you will want to wait until both the 50-day moving average has turned into a bullish trend AND the 20-day moving average has crossed above the 50-day moving average.

What to Do Until the Bottom Gets Here
Obviously, the first answer is to remain patient.

I know, that’s not easy, but patience and planning are the two things that set the winners and losers apart when it comes to investing.

Here’s the planning part… DO NOT BE AFRAID TO TAKE PROFITS.

Sure, the S&P 500 is 8% lower than its February highs which can make it hard to think about selling shares of NVIDIA or Google, but you have to remember one thing…

Lower can always go lower.

The Nasdaq 100 broke through its 200-day moving average last week. Historically, this puts the market in a very dangerous place.

The last time that the Nasdaq 100 moved below this trendline for more than a week was January 7, 2022. It was the beginning of the 2022 bear market and conditions were like what you are experiencing today.

Stocks were roughly 12% off their highs and yes, investors had the same sentiment that they are expressing now as they were hesitant to sell stocks for fear that they would miss out on more gains.

That market ran another 28% lower before bottoming later that year in October. Keep in mind there were many “false bottoms” during 2022, but only one real bottom.

Cash is a position, especially in a bear market

Keep that in mind as you hold back on selling some of those high profit positions now.

— Chris Johnson

Former Wall Street Insider Calls This His Biggest Gold Play Yet [sponsor]
Karim Rahemtulla, the trader behind a 400% gain in 24-months on Rolls-Royce, has uncovered another potential multi-bagger. This under-$20 stock gives you exposure to over 1-oz of gold with the lowest production costs in the industry. And an upcoming announcement could send this stock soaring. Get Karim's urgent briefin - click here now.

Source: Money Morning