How to Adapt to Changing Markets

JC Parets
April 17, 2024

This market is just NOT like it was in 2023.

It's much different.

I've said it right here hundreds of time already.

But today's chart of the day really shows this well, reiterating why it's so important to adapt to changing markets.

Here is the S&P500 with a line plotted below it. This line represents the percentage of stocks in the index that are in longer-term uptrends, but are NOT in short- to intermediate-term uptrends.

We calculated the longer-term uptrends by using the 200 day moving average. And we calculated the lack of short- to intermediate-term uptrends by using a 50 day moving average.

We're currently seeing the most amount of stocks above their 200 day, but below their 50 day since 2021.

So what does this all mean?

First of all, it's just a much different market than we were in last year. We just quantified that.

But more importantly, what do we do about it?

For me, it all comes down to time horizon. Yes, many of these stocks are above their 200 day moving average. This keeps the longer-term structural picture for investors still intact.

Remember we're now almost 2 years into a bull market.

But if you're looking out over the next few weeks or few months, just understand than many of these markets are a mess.

Trend following strategies have been working less and less this year. Breakouts are failing more and more.

Fewer and fewer stocks have been making new highs.

This creates a messy environment, with higher volatility over the near term.

There are strategies that are great for that, and there are strategies that are terrible for it. (Hint: the best strategies last year are not very good for the current environment.)

Let's visualize these changes further, so you can really see it.

In Green we're seeing the % of S&P500 stocks above both their 200 day and their 50 day. As many of these as we saw last year, in 2024 we're seeing the fewest amount of stocks in this category.

In Red we're seeing the % of S&P500 stocks below their 200 day and below their 50 day moving averages. There aren't many of these as over 2/3rds of the S&P500 stocks are still above their 200 day.

The winning group here is the % of S&P500 stocks ABOVE their 200 day but BELOW their 50 day. In other words, a longer-term uptrend, but a short-term mess:

This is a really cool visual that our team put together.

But it's what we do about this data that counts the most.

And that's where tonight comes in.

We'll get going LIVE @ 6PM ET.

Best Trades, Biggest Themes, Most Impactful Changes, and what to expect for the rest of Q2.

This is one that you cannot miss!

ASC Premium Members Register Here.

If you're not already a Premium Member you can join us here RISK FREE to receive a link to tonight's LIVE Video Conference Call, download all the slides and access the Trade Ideas Page.

Click here.

See you tonight!

JC

 

 

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