The Market Is Weak And Getting Weaker Jan. 22, 2022 12:59 AM ET...

  1. 19,991 Posts.
    lightbulb Created with Sketch. 1943
    The Market Is Weak And Getting Weaker
    Jan. 22, 2022 12:59 AM ET
    Summary

    • On 2/10/21, 92.18% of the stocks were trading above their 200-day moving averages.
    • On 8/19/21, the stocks trading above their 200-day moving averages had declined to 50%.
    • At today's close (1/21), only 31.33% were trading above their 200-day moving averages.



    fotoslavt/iStock via Getty Images

    My article today will be very short and to the point. One of the most asked questions I see everywhere is: How do we know if we are in a bear market?

    My answer is very simple: YES, we are!

    My favorite optimism/pessimism indicator is how many stocks are trading above their 200-day moving averages. If more than 50% are trading above, I consider that an optimistic trend; and if percentage is below, that's a pessimistic trend.

    This is a chart of how many stock were trading above their 200-day moving average each day for the past year:


    Barchart.com

    This chart really doesn't need a lot of explanation. Optimism was the highest on 2/10/21 at 92.18% and has been on a very, very steady decline since that day.

    I don't know how you manage your portfolio but my absolute worst case stop loss is the 200-day moving average and my sell point is usually when my position shows a loss at the 3-month mark.

    My stop losses and sale points are triggering and I'm accumulating cash.

    I will continue to accumulate cash and will wait till I see this chart begin to trend upward again.

    Please be careful and rational and not let your emotions get the better of you.

    This article was written by

    Jim Van MeertenFollow

    Jim Van Meerten is an advisor to Marketocracy Capital Management and writes on financial subjects here and on Barchart Portfolio Blogs and Seeking Alpha. He earned a BS in Accounting and Business Administration from Berry College; a Juris Doctorate from the Woodrow Wilson School of Law; and attended post-baccalaureate and graduate courses in Business Administration, Quantitative Math, and Education at Florida Atlantic University, Georgia State University and University of North Carolina at Charlotte. In the past he has been an accountant, attorney, adjunct professor in Business Law, Accounting and Internal Auditing, financial advisor, supervisory principal, and compliance officer. He also passed the Georgia CPA Exam, the Certified Internal Auditor Exam, and the FINRA Series 7, 24 and 9/10 exams.He is presently also a contributor on MSN Top Stocks Blog, Motley Fool and is a member of the M100 on Marketocracy, an elete honor chosen by the editors of Marketocracy as being in the top 100 portfolio managers of over 100,000 portfoiios they review.
 
arrow-down-2 Created with Sketch. arrow-down-2 Created with Sketch.