Today Starts a Bear Market As Dow Experiences the Death Cross

Three months from now if the Dow is in a downward spiral, you can look back and say that Thursday, April 17 was the day that started the Bear Market.  For technical analysts, Thursday’s close signalled what is known as a Death Cross.  That is when a short-term average intersects and goes below a long-term average.  In this case, the 50-day moving average has now intersected the 200-day moving average. 

The last time we had a Death Cross was in March of 2022.  At that time the Federal Reserve was raising interest rates to fight inflation.  The Dow dropped 5% a month later and 7% six months later.  At one time it had dropped 12% within that six-month span.  The opposite of the Death Cross is the Golden Cross when the 50-day average surpasses the 200-day average.  It would take 11 months for the Dow to experience the Golden Cross and get back into positive territory.  It had remained in positive territory until now.

Now before we all get hysterical with cries that the sky is falling, let’s take a breath, take a step back and keep things in proper perspective.  The stock market is a function of fear and greed.  Markets go up and markets go down.  What is your goal?  What is your timeline?  If you are in it for 20 years, this is not the last Death Cross you will experience.  However, if you are looking to retire in the next six months you need to seriously consider if you need to get out fast.  A serious conversation with your financial planner is in order immediately.  The key thing is to not let emotion get the better of you.

The next thing to ask is why is this happening?  This is a result of Donald Trump’s tariffs, end of story.  The market has spoken.  Tariffs are a lose-lose for everyone.  The market downturn is just the start.  Financial institutions are forecasting a recession by the end of the year.  This is completely unnecessary because of one man’s misguided perspective on world affairs.

Enough of the political rambling.  Worry about what you can control and that is your personal investments.  You can profit in these times by shorting the market.  Discuss that with your financial planer.  Also, when, not if, but when the market turns around, there will be significant buying opportunities because many companies will be oversold, and their respective stock price will be a bargain.

This is exactly what we do at twopercentgoal.com.  We are swing traders, not day traders, looking for buying or shorting opportunities that last for about a week.  We look at moving averages, relative strength indexes and MACD curves to take advantage of stock prices that are either overbought or oversold.  Our ultimate goal is to double our money each year virtually risk free by earning 2% a week.  Sign up for the daily email with recommendations poised for a 2% gain.  The email is free for the first 30 days and then $99/month thereafter.  You will also get a spreadsheet showing all picks for the last year and how each performed.   Til then, good luck to us all.

Cheers,

Al

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