There’s been a lot of talk about an imminent recession given all the bad news, slowing economic data, etc. I don’t know about you but I do not manage peoples assets based on opinions, I like proof.

How do we know the bull market has finally ended and a bear market has now begun? The answer is we never know with 100% confidence but historically there’s one measure that’s been a pretty good “line in the sand” mark. Below I have posted a chart of the S&P 500 going back to 1990 with a purple line denoting the 200-week moving average. As you can see, the 200 week line is a decent level to assess the difference between a correction in a bull market and a bear market beginning. As you can also see, the really bad things happen once the market breaks down from the 200 week level, currently around 2503 on the S&P.

With all the doom and gloom, am I the only person who’s surprised to see the S&P 500 within 3% of its all time high? Based on the media and investor sentiment one would assume the market has already fallen by 50% given all the headwinds that everyone see’s.

The market is smarter than the news media folks. Build a plan for de-risking and mine is to watch for a weekly break of the 200 week moving average, currently around 2503. Yes, that would not feel good to fall this far and I would likely do some de-risking before 2503 but the major draw-downs tended to happen AFTER we broke the 200-week level.