{"id":20305,"date":"2022-11-02T07:30:15","date_gmt":"2022-11-02T11:30:15","guid":{"rendered":"https:\/\/www.jeffclarktrader.com\/?p=20305"},"modified":"2022-11-02T07:30:15","modified_gmt":"2022-11-02T11:30:15","slug":"the-stock-markets-line-in-the-sand","status":"publish","type":"post","link":"https:\/\/jeffclarktrader.com\/market-minute\/the-stock-markets-line-in-the-sand\/","title":{"rendered":"The Stock Market\u2019s Line in the Sand"},"content":{"rendered":"

A line in the sand is supposed to mark a limit, along with consequences if crossed…<\/p>\n

Some lines are clear in the stock market. Like declaring a bear market when stocks fall 20% from a prior high.<\/p>\n

But it’s less clear when the line is crossed the other way. Like when a bear becomes a new bull.<\/p>\n

There isn’t a widely accepted definition. But to declare an end to this bear market, I have my own measures… including a time-tested indicator with a great track record over the last two decades.<\/p>\n

So today let’s talk about moving averages. I’ll go over why I use them, plus the specific average that could signal an end to this bear market…<\/p>\n

How to Spot a Change in Trend<\/h2>\n

A moving average is an indication of trend. It tells you if prices are generally moving higher or lower over a trailing period.<\/p>\n

Moving averages are closely followed because they can signal a change in the stock market’s direction. If an index like the S&P 500 has seen a period of rising prices but then suddenly crosses below a moving average – that’s an early warning signal of a change in trend.<\/p>\n

While you can look at any trailing period you want, many investors focus on intermediate-term time frames like the popular 50-day moving average (MA).<\/p>\n

But when it comes to signaling an end to this bear market, my focus is on one key moving average that’s had a track record of success during prior busts…<\/p>\n

When Bust Turns to Boom<\/h2>\n

The 200-day MA measures the “big picture” prevailing trend since it averages prices over a longer time frame.<\/p>\n

And when it comes to bear markets, the 200-day MA becomes one of my go-to indicators for spotting a potential change in trend.<\/p>\n

Just look at how things unfolded during the last two prolonged bear markets that occurred during the 2000 “dot-com” bust and 2008 financial crisis. Those episodes were notable due to the magnitude of the price decline and<\/em> their length of time.<\/p>\n

During those downtrends, the S&P 500 never sustained a cross above the 200-day MA until the true bottom was established.<\/p>\n

Here’s the S&P 500 and the 200-day MA (red line) during the dot-com bear market…<\/p>\n

\"Chart\"<\/div>\n

The arrows show two attempts at crossing above the 200-day MA. But ultimately, those attempts failed.<\/p>\n

It wasn’t until 2003 (green circle) that the index achieved escape velocity.<\/p>\n

During the financial crisis in 2008, the index never crossed above the 200-day MA until the bottom was seen.<\/p>\n\n\n\n
\n

Free Trading Resources<\/strong><\/p>\n

Have you checked out Jeff’s free trading resources on his website? It contains a selection of special reports, training videos, and a full trading glossary to help kickstart your trading career \u2013 at zero cost to you. Just click here<\/a> to check it out.<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Now take a look at what’s happened this year…<\/p>\n

\"Chart\"<\/div>\n

Ever since falling into bear market territory, the S&P 500 tested the 200-day MA once and failed (green circle).<\/p>\n

And with the recent rally, we could be gearing up for another critical test at the 200-day MA – which sits just 5% above the current price.<\/p>\n

If the S&P 500 can sustain a cross above the 200-day MA, then that’s a great sign the big-picture trend is changing for the better.<\/p>\n

But if the index fails at that level, then prepare for the next wave of selling.<\/p>\n

And if you want to be ready for whatever happens next, make sure to tune into Jeff Clark’s urgent market briefing tonight<\/a>.<\/p>\n

At 8 p.m. ET, Jeff will explain a quickly approaching event that’ll cause something in the market to “snap.”<\/p>\n

This event could slaughter portfolios and many popular stocks will freefall overnight. But fear not, Jeff will show you how to protect your money during his presentation<\/a>.<\/p>\n

There’s not much time left to prepare… so click right here to instantly reserve your spot<\/a>.<\/p>\n

Best regards,<\/p>\n

Clint Brewer
Analyst, Market Minute<\/em><\/p>\n

<\/p>\n

Reader Mailbag<\/strong><\/h2>\n

What trailing period do you prefer to use for technical analysis?<\/p>\n

Let us know your thoughts – and any questions you have – at feedback@jeffclarktrader.com<\/a>.<\/p>\n

<\/p>\n","protected":false},"excerpt":{"rendered":"

Forget the Fed and watch this key price level\u2026<\/p>\n","protected":false},"author":49,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"ep_exclude_from_search":false,"service":"","footnotes":""},"categories":[1],"tags":[],"publication":[10],"person":[82],"newsletter-type":[],"ticker":[],"class_list":["post-20305","post","type-post","status-publish","format-standard","hentry","category-market-minute","publication-market-minute","person-clint-brewer"],"acf":[],"_links":{"self":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/20305","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/users\/49"}],"replies":[{"embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/comments?post=20305"}],"version-history":[{"count":0,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/20305\/revisions"}],"wp:attachment":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/media?parent=20305"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/categories?post=20305"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/tags?post=20305"},{"taxonomy":"publication","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/publication?post=20305"},{"taxonomy":"person","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/person?post=20305"},{"taxonomy":"newsletter-type","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/newsletter-type?post=20305"},{"taxonomy":"ticker","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/ticker?post=20305"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}