On September 14 at 7:08 a.m. we sent a Market Alert to our subscribers that said : “Since the DOW closed below its 50-Day Moving Average of 52944.80 on Tuesday, and stayed below it for 2 Days, we believe we are in the beginning stage of what could be a Devastating Bear Market. To be Prudent, and to protect assets, we would be Selling and Going to the Sidelines.”
And on Monday in our Market Letter, we noted that the Nasdaq 100 and the S&P 500 had crossed back above their 50 Day Moving Averages, and said “so it appears the correction was short lived.” I did say that I was still cautious, and gave my usual 8 stock picks.
Wednesday was a bad day for the Market. Lots of stocks, that were supposedly moving up, moved down instead, crossing below their 50-Day Moving averages, including Amazon (AMZN) 249.27 and Alphabet (GOOG) 334.98. That being said, the Market is overdue for a correction.
The Dow moved up about 18,000 points in the last year and a half, Up 48%, The SP 500 moved up 3000 points, up 63%, and the Nasdaq 100 moved up 14,500 points, up 89%. So I still would err on the side of caution, and start taking profits, especially on High PE, High Priced stocks that have made big moves, like Crowdstrike (CRWD) 262.49, Palo Alto (PANW) 393.30, Twillio (TWLO) 290.70, Datadog (DDOG) 251.49, Nebius (NBIS) 226.61 etc. To be safe, I sold my Fate Therapeutics (FATE) at $2.45 on Wednesday, a stock that I like and think is going a lot higher.
If you look at the chart of the DOW, which is way up since April of 2025, it crossed below an Up trendline in the first week of September, and also closed below its 50 day Moving Average, two bearish events.
On the other hand, The S&P 500 chart still looks strong. It broke out of a consolidation triangle on the upside in early August, and is still holding above its 50 Day Moving Average. The Nasdaq 100 chart also looks strong – it closed above a consolidation trendline on Monday, and is also holding above its 50 Day Moving Average.
But you need to remember that the Market Indices are at all-time highs, and that “Stocks Don’t Go Up Forever”, especially in such perilous times with an expanding Iran conflict, a President that will probably be impeached, Soaring National Debt of 40 Trillion Dollars, and risk of a terrorist attack on U.S. soil. The bottom line is – We don’t think the Bear Market is going away. A Bear Market comes like a “thief in the night”, when least expected. And when your Great, Substantial, Well Known, Heavily
Touted stocks begin to decline, you dismiss it as a minor adjustment.
But they keep going down. And if you’re on margin, you can get wiped out…and lose it all. We don’t trade on margin, it clouds your judgment.
Nothing I say in this article is Investment Advice. For Investment Advice, contact a Registered Investment Advisor, or Certified Financial Planner.
This article is not investment advice and it is not in any way to be construed as investment advice. For Investment Advice consult a Registered Investment Advisor or a Certified Financial Planner. Joe Cotton’s website is www.cottonstocks.net.
Returning as a columnist for the NKyTribune, Cotton is publisher of the market newsletter, Cotton’s Technically Speaking. He is a graduate of Xavier University, a former bank manager and credit analyst, and a former Fidelity Investments registered investment representative. Contact him at cottonstocks@hotmail.com