David Ryan @_dryan3100

Bear markets usually have 3 moves down. If a 3rd leg is underway and based on the previous legs, it could bring the major averages down to these levels: SPY 354, QQQ 240, and the NASDQ Composite 9850. Stay defensive with lots of cash.

Seeing signs this downtrend is about over. This could be tradable for those fast enough. It will probably be another two to three week rally like we saw in March. There is lots of overhead supply and moving averages in downtrends that will be hard to get through.

With the 50 day moving averages broken on the major indexes, the next stop down are their 2/24 lows. I expect this fast two day drop to be followed by a grinding, torturous decline with weak rallies that shouldn’t be traded. The goal is to loss a little as possible.

If the major market indexes break below their 50 day moving averages, then we will make a trip back to the lows. With rising interest rates overhanging the market, any minor rally should be used to further cut back exposure.

The best of the rally is behind us. I would use this opportunity to sell any stocks you are holding with losses. Repeating what I have said for the last year, stay with the cyclicals and metals.

With the major indexes back at their 2/24/22 lows, I would be looking look for a turn here and a tradable rally. Be careful, the longer term trend is still down and any rally might not last longer than a couple weeks. News events will also add to the volatility of such a move.

Use this rally to sell any tech stock that has dropped more than 50% from its high. It could take years for them to come back, if they do come back. The market's rally since Thursday is likely over and could be going back to the lows. Stay with cyclicals, oil, defense and gold.

From my last tweet the QQQ's hit my target and SPY's got close. We are now on our way back to the lows on the QQQ's. The SPY's will hold up better with more cyclical names. Cyclicals are the place to be invested. Study the big winners from 1970's and most are from that sector.

With Friday's reversal, there could be a rally back up to the 200 day on the QQQ's and 50 day on the SPY. I would use this to sell any stock you let losses get too large. Many stocks with big declines will have to base for months before staging more than a short term rally.

I presented this on IBD Live Jan 4th to show the impact of increasing rates on the 10 Year Note from 1/25/21 to 3/4/21. The QQQ's lost 7.3%, 3X Tech (TECL) lost 17% and 3X Financials (FAS) gained 27%. Rates moving higher this year are starting to produce similar results.

SPY trying to break downtrend line since 11/22. If it holds, it could have a year end rally. Short term swing trades are best in this market. With damage to technology stocks, it looks like the market is rotating into less volatile areas like: housing, super markets, REITS.

Distribution continues in the major averages. SPY down 8 of the last 10 days, some on increased volume. It is now below the 50 day MA. Be careful, but also know this weakness has been bought 8 times in the last year. Does this market have 9 lives?🐈‍⬛

The uptrend in the major averages have been masking the weakness in a majority of stocks over the last month. They might start to catch up on the downside. Be careful of having too much exposure, especially when gains have been hard to achieve.

Even with poor advance/decline numbers lately, the fed/gov push of money into the economy, keeps the markets moving higher. Increased exposure over the past few weeks. Areas turning after drifting for months are housing, financials, and metals/mining.

Little to add from my tweet a month ago. I have little exposure to stocks. Won't buy until I see the proper setups. Could be another 2 day drop that has occurred every 3 to 4 weeks. The difference now is fewer stocks in strong uptrends. Still favor buying pullbacks to breakouts.

I continue to cut back my exposure with over 50% cash. Group leadership has narrowed and changes day to day, few breakouts follow through, and it is harder making progress in the last 5 weeks. I also want to preserve the gains I had in the first four months of the year.

The market seems to have lost its mojo. There is enough stimulus money to keep the market afloat, but not to continue a lot higher. Leadership changes day to day. Keep lots of cash and wait for the right setup. Be much more selective in what you trade.

I continue to buy only pullbacks in strong groups, while avoiding just about every breakout which are not following through. Stick to the leading groups like oils, steels, financials, agriculture and retailers. Still staying away from most technology stocks.

Short term rally looks to be starting in a number of beaten down tech stocks. Many have dropped to their 200 day moving averages. Trade them if you want, but I am staying away from them for the most part. Examples include: TWLO, SHOP, TTD, CRSP, TWST, Z.

I would sell this rally in the QQQ's. Most names in this index will underperform in the intermediate time frame. The "economy opening plays" have also gone too far. Stay with infrastructure, cyclicals and commodities.