There’s no Goldilocks in the markets right now. There are only the three bears — and those bears are growling with ferocity.
Although not technically in a bear market in terms of percentage off the recent high, my benchmark for what I consider a market trouncing into bear territory is the 200-day moving average.
This is the benchmark technical indicator that my dad, Dick Fabian, taught me to pay the most attention to, as it is the key breaking point to determine when you should be in stocks — and more importantly, when you should be out of stocks.
To this day, the 200-day moving average largely determines how we make decisions in the Successful ETF Investing newsletter.
If we look at what’s happened in the markets during the past week, we now see that the 200-day moving average has been breached with conviction in all three major indices — the Dow, S&P 500 and the NASDAQ Composite.
The charts below of each respective market tell the tale of woe better than any verbiage can.
As you can see, the major indices haven’t been below the 200-day moving average since October 2014.
This definitely means the bears have set up camp on Wall Street.
Of course, the positive spin here is that after stocks got smacked down in that October tumble, they embarked on a 10-month bull market run that kept investors feeling really good — at least up until this week.
While we don’t know how long the current conditions will last, we do know that the market is replete with uncertainty here.
That uncertainty is largely due to China and its ability to keep up its economic growth targets; how China will affect the rest of the emerging markets and the commodities markets; and particularly how the unknown of when and/or if the Fed is going to raise interest rates in September or sometime this year.
Given all the market has to deal with right now, I am glad that cash is king in terms of my Successful ETF Investing newsletter recommendations.
If you want to know what to do right now, and just as importantly, if you want to know when it’s time to put cash to work, I invite you to check out Successful ETF Investing today!