Image Source: Unsplash
 

• Red Flag Alert: Only 5 S&P 500 Index (SPX) stocks had a 100% Barchart Opinion on Friday, April 4, and all experienced a down day, signaling market distress.
• Market Conditions: S&P 500 and Nasdaq-100 Index (IUXX) futures are down significantly, with very few stocks trading above their daily moving averages.
• Investment Strategy: I’m waiting for positive signals from Trend Seeker, Barchart Opinion, and Weighted Alpha before reentering the market.
• Capital Preservation: In a bear market, the goal is to preserve capital, not just beat the market. Be patient and wait for clear signals.

Normally when I screen for stocks to feature in the Chart of the Day, I screen for stocks with a 100% Barchart Opinion and the strongest strength and direction signals.

At the close of Friday, April 4, only five S&P 500 Index stocks had a 100% Barchart Opinion. All five had a down day on Friday. (That’s five out of 500!)

• Cencora (COR)
• Exelon (EXE)
• Kroger (KR)
• McKesson (MCK)
• O’Reilly Automotive (ORLY) 

How Bad Is It?

Very bad.

One of the pages I look at every day is the Stock Market Momentum & Daily Stock Activity page. As of Friday’s close, very few stocks were trading above their daily moving averages (DMAs).

• 5 DMA: Only 4%
• 20 DMA: Only 7.06%
• 50 DMA: Only 9.25%
• 200 DMA: Only 19.18%

Just look at the S&P 500 down 5.97% on Friday, and the Nasdaq-100 was even worse, down 6.07%.

As I write this on Sunday, April 6, S&P 500 June futures are down 5.94% and Nasdaq-100 June futures are down 6.09%, so don’t look for a big turnaround on Monday.

What I’m Looking for Next 

I always look at the charts and the Barchart Opinion, Trend Seeker and Weighted Alpha of the major indexes and I advise you do the same: 

S&P 500 (SPX):

(Click on image to enlarge)

www.barchart.com

Barchart Technical Indicators (SPX) 

• Trend Seeker: “Sell” signal on Feb. 27 and down 13.43% since.
• Barchart Opinion: 72% “Sell”
• Weighted Alpha: (9.64)

Nasdaq-100 (IUXX)

(Click on image to enlarge)

www.barchart.com

Barchart Technical Indicators (IUXX)

• Trend Seeker: “Sell” signal on Feb. 25 and down 17.5% since.
• Barchart Opinion: 56% “Sell” 
• Weighted Alpha: (12.25)

What I’m Doing Now

Most of my stop losses have triggered and I’m sitting on a pile of cash. I’m being patient and waiting for the signal to reenter. That signal will be when I see the Trend Seeker, Barchart Opinion, and the Weighted Alpha of these two indexes meet my criteria.

Why It’s Important 

There are times when beating the market just isn’t good enough, and now is one of those times.

In a bull market that is up 15%, it’s the time to make money. If you are beating the market by 5%, 10% or even 15%, you’re a genius and you can go ahead and brag.

In a bear market that is down 15% (as it is today), beating the market and being down only 12% or 8% isn’t good enough. You have lost money!

Remember: Your goal in a bull market is to beat the market. Your goal in a bear market is to preserve capital and not lose money.

Be patient and wait until the data gives you the signal.

More By This Author:

Cencora: This ‘Recession-Proof’ Stock Just Set New Highs And Is Flashing ‘Buy’ Signals
Chart Of The Day: This ‘Insulated’ S&P 500 Stock Is Staring Down Its 52-Week High
AT&T Has Momentum