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Momentum Monday - Will The Correction Become A Bear Market?
The Nasdaq 100 now well below the 200-day moving average
Howard Lindzon
March 10, 2025
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A very dark, not quite Black Monday, that was.
Last night as Ivanhoff and I were going through the charts it felt pretty obvious this week could start bad (scroll down if you want to go right to the video). People are stuck in the wrong stocks right now. That is part of the fear that has been accelerating along with the selling in growth.
For weeks I have been harping on the ‘deglobalization’ and historically what it has meant. Today, was more of the same. Charlie’s chart shows you what ‘deglobalization’ and tariffs mean as money moves …
Today I was watching the Robinhood ( $HOOD ) , Tesla ($TSLA) and Palantir ( $PLTR ) streams on Stocktwits (the which has been pretty bearish the last few weeks) and though still bearish, you can see too many people trying to call a bottom. I have way too many smart friends that own the Nancy Pelosi ‘stock tracker, which is the dumbest thing I have heard of in many years. Again, Charlie has a great chart that shows you how everyone seems to be in the same trade…which has quickly stopped working…
After today, the decline is getting serious…
In 2009 we were coming OUT of the Great Financial Crisis. This time our leadership seem to be looking for one with ‘deglobalization’, tariffs and shameless billionaires acting above the law.
Does it matter to Elon or Jeff Bezos or Zuckerberg if their stocks are down 30-50 percent in the intermediate term? No.
Investors are not panicking out of stocks in general, just the stocks that everyone got used to owning the last 15 years.
Ivanhoff and I do tour some of the stocks and sectors holding up the best. Hope it helps…
Welcome back to Momentum Monday!
In today’s episode of Momentum Monday, Ivanhoff and I discuss the following:
Market Decline and Momentum Leaders
Market Trends and Defensive Sector Rotation
Market Instincts and Defensive Shifts
Navigating Volatile Market Conditions
Elon Musk, Starlink, and Market Dynamics
Navigating a Tactical Market: Strategies and Expectations
Reminder: Riley on my team created the ‘Trends With No Friends’ email which is my go to list every day to track what is working and what is not. You can get it for free here.
In This Episode, We Cover:
Here are Ivanhoff’s thoughts:
The correction continues with full force. It might sound funny to some that we are talking about a correction while the S&P 500 is down just 2% year-to-date, but the damage in many market leaders from last year has been substantial. One by one, all momentum bastions have been taken out. Last week, we talked about the relative strength in financials. It didn’t take long for that to change. Financials also dived lower. Looking at earnings reactions, almost all major upside earnings gaps were completely closed. This is a bear market price action. QQQ and SPY are right at their rising 50-week moving average. Historically bear markets live under the 50-week moving average. The indexes are at a pivotal point.
With all that weakness, some might be wondering if there is any strength left in the market right now. There is, but typically, it is not a good idea to chase it. Telecoms like TMUS and VZ, fast food stocks like MCD, healthcare stocks like JAZZ, GILD are still near their 52-week highs and up on the year. Such rotation into typically defensive sectors happens when the market expects an economic slowdown. Outside the US, we see notable strength in European and Chinese equities. Gold is near all-time highs. Gold miners ETF, GDX is setting up for a potential breakout to new multi-year highs.
The markets don’t like uncertainty. The new administration has brought uncertainty with frequent direction changes regarding tariffs, trade policies, and political relationships. More uncertainty means more volatility. By now, the market has accepted that volatility will be elevated for the foreseeable future. All eyes are now pointing towards the Fed. The Payroll numbers were below estimates. Unemployment is ticking up, while hourly wages are growing below estimates. The Fed is typically too patient and slow to act, but soon they might have enough arguments for more rate cuts.
We remain in a corrective market where it is essential to keep drawdowns small and if possible, even increase our capital with select tactical hits. What works in this tape is not what worked for the better part of 2024. The current tape requires different tactics and willingness to change our market view often. All types of markets – bull, bear, range-bound provide good trading opportunities, but they require a different approach.
And here are the charts discussed:
PS - Here is the latest ‘Trends With No Friends’ which covers ‘new highs and new lows’ and measures the followers (friends) on Stocktwits versus the prices. Subscribe here.
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